By Elizabeth Adegbesan

The Central Bank of Nigeria (CBN) has reported a 23% decline in the Federal Government’s deficit spending, which fell to N3.3 trillion in the third quarter of 2024 (Q3’24) from N4.3 trillion recorded in the second quarter (Q2’24).

This was disclosed in the CBN’s Q3’24 Economic Report, which attributed the contraction in the deficit to a sharper decline in government expenditure relative to revenue, reflecting efforts to enhance fiscal efficiency and reduce operational costs.

Retained Revenue: The Federal Government’s retained revenue decreased by 4.2% quarter-on-quarter (QoQ) to N2.3 trillion in Q3’24, down from N2.4 trillion in Q2’24. This was largely due to reduced receipts from the Federation Account and lower independent revenue.

Expenditure: Total expenditure dropped by 16.4% QoQ to N5.6 trillion in Q3’24, compared to N6.7 trillion in Q2’24. The decline was attributed to fewer maturing loan payment obligations and deliberate fiscal policies aimed at optimizing efficiency and reducing operational costs.

Fiscal Balance: “The overall fiscal balance of the Federal Government narrowed in Q3’24,” the CBN stated.

While the primary deficit widened by 155.28% QoQ, the overall deficit contracted by 22.51% to N3.30 trillion, indicating improved fiscal discipline.

Expenditure Composition: Recurrent expenditure accounted for 66.84% of total spending, while capital and transfer payments constituted 25.36% and 7.80%, respectively.

Decline in Overheads and Interest Payments: The drop in expenditure was driven by an 8.92% reduction in interest payments and a significant 45.51% decrease in overhead costs.

Quarterly Targets: Aggregate expenditure of N5.58 trillion was 22.38% below the quarterly target of N7.19 trillion. Retained revenue also fell short, 5.22% lower than Q2’24 levels and 53.41% below the benchmark.

Conclusion

The contraction in deficit spending reflects the Federal Government’s commitment to enhancing fiscal efficiency and managing operational expenses. With lower interest payments and a deliberate focus on reducing overheads, the government aims to sustain this trend in the coming quarters.