Nigeria’s fiscal deficit has over shot budget projections, with recent figures showing a budget deficit of 7.6 per cent of Gross Domestic Product (GDP) as of August 2024, surpassing the budgeted 3.8 per cent target for the year.
This is according the personal statements of Central Bank of Nigeria (CBN) Monetary Policy Committee (MPC) members, who voiced concern over the growing gap between revenue generation and spending.
At the start of 2024, the National Assembly approved a budget of N28.7 trillion with a revenue target of N19.5 trillion, leaving a budget deficit forecast of N9.1 trillion equivalent to about 3.8% of GDP.
However, the deficit has surged well beyond projections, with a supplementary budget of N6.2 trillion proposed later in the year, compounding the fiscal strain.
According to MPC member Aloysius Uche Ordu, Nigeria’s revenue collection significantly underperformed, reaching only 37.9% of the year’s target in the first half of 2024.
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This shortfall was attributed largely to deficits in the Federation Accounts Allocation Committee (FAAC) receipts, which hindered the federal government’s ability to meet its financial obligations.Despite a reported 33.31% improvement in retained revenue from January to June compared to the same period in 2023, overall revenue still fell 62.1 per cent short of its target, a gap that highlights the country’s fiscal challenges.
According to Nairametrics, MPC member Lamido Yuguda also highlighted the consequences of Nigeria’s low revenue base, stressing that it underpins the weak fiscal performance in the first half of the year.
Provisional numbers indicate that the fiscal deficit already stands at 91.94% of the full-year target as of June, raising questions about how the federal government will finance the remaining budgeted expenditure without further widening the deficit.
Aloysius Uche Ordu emphasized that Nigeria’s spending priorities leaned heavily toward recurrent expenditures, driven primarily by debt servicing costs.
Meanwhile, capital expenditure, a critical area for economic growth and development, continued to lag.The excess spending on recurrent needs has been compounded by a reluctance to reprioritize resources in favour of capital projects that could drive longer-term economic improvements.
