BY Anastasia John E.
The Federal Government’s deficit spending surged by 28% year-on-year, reaching N12.1 trillion in the first ten months of 2024, according to data from the Central Bank of Nigeria (CBN). This marks an increase from N9.8 trillion recorded during the same period in 2023.
The analysis from the CBN’s Monthly Economic Reports revealed that the Federal Government exceeded its 2024 deficit target of N9.8 trillion by 31%. This rise in deficit spending occurred despite a 36% year-on-year increase in government revenue during the same timeframe.
In the first quarter of 2024 (Q1’24), deficit spending was reported at N4.18 trillion, which grew by 1.9% quarter-on-quarter to N4.26 trillion. However, in the third quarter of 2024 (Q3’24), deficit spending decreased by 23% to N3.3 trillion, with October 2024 recording a deficit of N361.89 billion.
The increase in government revenue was largely driven by a 54.5% year-on-year rise in revenue to the Federation Account, which totaled N20.214 trillion in the first ten months of 2024, up from N13.079 trillion in the same period of 2023.
Revenue to the Federation Account rose from N4.973 trillion in Q1’24 to N6.388 trillion in Q2’24, and further increased by 7.5% to N6.865 trillion in Q3’24. However, October saw a month-on-month decline of 7.9% to N1.988 trillion.
The Federal Government recorded a 36.6% year-on-year growth in revenue, reaching N6.86 trillion in the first ten months of 2024, compared to N5.02 trillion in the same period in 2023. Quarter-on-quarter, revenue grew by 71% to N2.4 trillion in Q2’24 from N1.4 trillion in Q1’24, but fell by 4.2% to N2.3 trillion in Q3’24. In October 2024, revenue stood at N763.79 billion.
Expenditure also saw significant changes, growing by 17.8% quarter-on-quarter to N6.7 trillion in Q2’24 from N5.6 trillion in Q1’24, but dropping by 16.4% to N5.6 trillion in Q3’24. In October, expenditure rose by 28.4% month-on-month to N1.83 trillion from N1.43 trillion in September.
In its Economic Report for October, the CBN stated, “From the federally collected revenue of N1,988.47 billion, a net balance of N1,298.87 billion was distributed to the three tiers of government after accounting for additional revenue and statutory deductions. The federal, state, and local governments received N424.87 billion, N450.96 billion, and N332.63 billion, respectively, while N90.42 billion was allocated to the 13% Derivation Fund for oil-producing states. Net disbursement was 7.90% above the previous month but fell short of the target by 43.76%.”
The report noted that provisional aggregate expenditure in October 2024 was 28.43% higher than the previous month, but 23.6% below the target of N2.4 trillion. The rise in expenditure was largely attributed to increased capital spending, which rose by N463.49 billion compared to the preceding month, though it still fell short of the target by 44.03%.
Overall, the Federal Government’s retained revenue increased during this period, primarily due to higher receipts from the government’s share of excess non-oil revenue. Provisional retained revenue in October was N763.79 billion, 6.07% above the previous month but 53.23% below the target.
The overall fiscal balance of the Federal Government widened in October 2024, with provisional data indicating that the primary deficit and overall deficit increased by N362.85 billion and N361.89 billion, respectively, compared to the previous month. This expansion reflects a significant rise in expenditure relative to revenue, highlighting the urgent need to enhance fiscal space by broadening the tax base and diversifying revenue streams.
