The federal government’s fiscal deficit has surged to N4.53 trillion in the second quarter of 2024, representing a significant increase from the N3.88 trillion deficit recorded in the previous quarter.
This alarming rise, as outlined in the Central Bank of Nigeria’s (CBN) economic report for the second quarter of 2024, highlights a growing fiscal imbalance and ongoing challenges in the nation’s budgetary framework.
The federal government’s total revenue remittance for the second quarter increased slightly to N2.3 trillion—a 57.66 per cent rise from the first quarter of 2024. However, it still fell short of the target for the period by 52.49 per cent, leading to a greater reliance on deficit financing.
Despite marginal gains in revenue, the government’s total expenditure reached N6.83 trillion in the second quarter, marking a 27.79 per cent increase from the previous quarter.
The lion’s share of this expenditure was directed towards recurrent costs, which accounted for 89.7 per cent of the total spending. Capital expenditures, typically seen as investments in infrastructure and development, made up a meager 3.66 per cent, while transfer payments were 6.37 per cent.
This sharp rise in government spending was largely driven by high interest payments on loans, as well as other financial obligations.
Analysts suggest that the heavy burden of interest payments, exacerbated by rising borrowing costs, is crowding out funds that could be used for development projects and other vital sectors of the economy.
The increasing fiscal deficit has sparked concerns among economists and financial analysts, who warn that the government’s growing reliance on borrowing to meet its obligations could further strain Nigeria’s economy.
With the country grappling with high inflation rates and foreign exchange challenges, the risks associated with the mounting deficit are becoming more pronounced.
