Godwin Emefiele, CBN Governor.
By Babajide Komolafe
The Federal Government (FG) recorded a 42 percent shortfall in revenue collected in the third quarter 2020 (Q3’20) which resulted in deficit spending of N1.29 trillion during the quarter.
The deficit spending recorded in the period represents a slight increase when compared with the N1.25 trillion recorded in Q2’20.
Central Bank of Nigeria (CBN) disclosed this in its economic report for Q3’20, saying that the FG recorded N842.09 billion revenue in Q3’20 which is 42.3 percent less than the budget benchmark of N1.458 trillion.
The apex bank blamed the poor revenue performance on the lingering effect of COVID-19 on economic activity, which caused 75 percent shortfall in collection from FG’s independent revenue sources.
CBN stated: “Given declining revenue and relatively high expenditure profile, the fiscal operations of the FGN in the review period resulted in a provisional deficit of N1.289 trillion.
“This represented 3.6 per cent and 47.0 per cent increase above the revised budget benchmark and the level in the corresponding period of 2019, respectively.
“The deterioration in the overall fiscal deficit, relative to the budget benchmark followed increased government spending aimed at curtailing the negative effect of the COVID-19 pandemic and restarting growth, through social intervention programmes and stimulus packages, and reducing infrastructural deficits.
“The prolonged revenue challenge of the FGN lingered in the review period, as the estimated retained revenue of the Federal Government at N842.09 billion fell short of the budget benchmark of N1.458 trillion by 42.3 per cent. “The shortfalls in the retained revenue of the Federal Government were attributed, largely, to the poor performance in collections from the FGN Independent Revenue sources, which at N56.21 billion, was 75.9 per cent and 72.9 per cent below the benchmark of N233.21 billion and N207.34 billion in the corresponding period of 2019, respectively.
“Also, projected receipts of N508.14 billion from ‘Other’ sources, including revenues from Special Account and Special Levies, were not realised in the review period, owing to the lingering effect of COVID-19 on economic activity
“Given the need to rationalise its spending amidst subsisting fiscal constraints, the provisional aggregate expenditure of the FGN at N2.131 trillion, in third quarter of 2020, was lowered by 21.1 per cent, relative to the revised budget benchmark.
“The estimated aggregate expenditure was marginally below the levels in the preceding quarter and the corresponding period of 2019, by 0.6 per cent and 2.6 per cent, respectively. The reduction in aggregate expenditure in the period, was driven, largely, by a 45.3 per cent drop in capital expenditure, relative to the budget benchmark.”