Government records N380b deficit in Q3, as earnings’ target fails

The Federal Government’s expenditure in the third quarter (Q3) of 2019 has been put at N1.41 trillion, while its retained earnings settled at N1.03 trillion, resulting in fiscal deficits of N379.68 billion.

The earnings also failed the quarterly budget estimate by 28.2 per cent, although it was above receipts in the preceding quarter by 18.3 per cent, according to the Q3 Economic Report of the Central Bank of Nigeria (CBN).

Of the total revenue, Federation Account accounted for 84.4 per cent, while Federal Government Independent Revenue, Value Added Tax, non-oil Excess Revenue Account, and Exchange Gain, accounted for 11.3 per cent, 4.1 per cent, 0.14 per cent, and 0.09 per cent, respectively.

The development, which showed that the country’s fiscal crisis is yet to end, came as the gross federally collected revenue in Q3 was N2.7 trillion, lower than the quarterly budget of N3.76 trillion, representing 28.2 per cent decline.

The decline in the gross revenue relative to the quarterly budget was attributed, largely, to shortfalls in receipts from oil revenue in the review period, an indication that the economy remains linked to crude oil fortunes.

Gross oil revenue, at N1.34 trillion or 49.6 per cent of the total receipts, was below the quarterly budget by 44.6 per cent, but was above the receipt in the preceding quarter by 9.9 per cent.

The decline in oil revenue, relative to the quarterly budget, was due, largely, to shortfalls in all the components of oil revenue, except domestic crude oil and gas sales.

However, gross non-oil revenue, at N1.36 trillion, rose above the quarterly budget of N1.34 trillion by 1.4 per cent, as well as the level in the preceding quarter by 28.0 per cent.

The higher non-oil revenue, relative to the quarterly budget, was as a result of increased receipts from corporate taxes, and improvements in the collection of the Nigeria Customs Service (NCS).

“After the statutory deductions and transfers of N443.68 billion and N486.29 billion, respectively, a net sum of N1.77 trillion was retained in the Federation Account for distribution.

“Of this amount, the Federal Government got N866.79 billion, State and Local governments received N439.65 billion and N338.95 billion, respectively, while the balance of N124.85 billion was transferred to the 13 per cent Derivation Fund for distribution among the oil-producing states.

“In addition, the Federal Government received N41.89 billion, while the State and Local governments got N139.62 billion and N97.73 billion, respectively, from the VAT Pool Account,” the report noted.

Further analysis of the report showed that the sum of N1.75 billion was drawn-down on the non-oil Excess Revenue Account and distributed as follows: Federal Government, N920 million; State governments, N470 million; and local governments, N360 million.

The sum of N3.02 billion was also shared as Exchange Gain among the Federal Government, N1.44 billion; State governments, N740 million; local governments, N560 million; and 13 per cent Derivation Fund, N280 million.

Meanwhile, government’s expenditure for Q3, at N1.41 trillion, was below the level in the preceding quarter and the quarterly budget of N2.59 trillion by 11 per cent and 45.8 per cent, respectively.

A breakdown of the total expenditure showed that the recurrent component accounted for 62.9 per cent (N886.89 billion), while the capital and statutory transfers accounted for 26.4 per cent (N372.24 billion) and 10.7 per cent (N150.87 billion), respectively.

A further breakdown of the recurrent expenditure showed that the non-debt component took a chunk of 60.4 per cent, while debt service payments got 39.6 per cent.