•Represents 92% of annual deficit target

•Deficit increase defies 35% rise in revenue

By Elizabeth Adegbesan

The Federal Government’s, FG’s , deficit spending rose by 28 percent year-on-year (YoY) to N8.44 trillion in the first half of the year (H1’24) from N6.59 trillion in H1’24.

The deficit recorded in H1’24 represents 92 per cent of the proposed annual deficit spending of   N9.18 trillion deficit as contained in the 2024 budget.

Furthermore, the increased deficit spending is in spite 35 per cent YoY increase in FG’s revenue in H1’24.

The Central Bank of Nigeria, CBN, disclosed this in its Quarterly Economic Statistics Report for September 2024.  

Analysis of the fiscal activities of the FG as disclosed by the apex bank showed that in the first quarter of 2024 (Q1’24) deficit spending stood at N4.18 trillion and grew by 1.9 percent quarter-on-quarter (QoQ) to N4.26 trillion in Q1’24. The report also showed that the FG recorded 35.7 percent YoY growth in revenue to N3.8 trillion in H1’24 from N2.8 trillion in H1’23.

QoQ revenue grew by 71 percent to N2.4 trillion in Q2’24 from N1.4 trillion in Q1’24. 

Recall that in August, the Chairman of the Federal Inland Revenue Service (FIRS), Zacch Adedeji, said that the FG is on track to achieve its N19.4 trillion revenue target for 2024, attributing the progress to President Tinubu’s initiatives aimed at addressing tax collection deficiencies.

Adedeji stated that the increased crude oil production this year, along with a stronger focus on tax compliance as factors   helping boost the trend.

In Q1’24, FIRS announced that the country recorded N3.94 trillion in tax revenue from its N4.8 trillion target for the period. Further analysis showed that expenditure grew by 30.6 percent YoY to N12.15 trillion in H1’24 from N9.3 trillion in H1’23.

The report also showed that expenditure grew by 17.8 percent QoQ to N6.6 trillion in Q2’24 from N5.6 trillion in Q1’24. The FG’s proposed 2024 budget of Renewed Hope stood at N27.5 trillion with a deficit of N9.18 trillion.

Revenue projected for the year was N18.32 trillion with an aggregate expenditure of N27.5 trillion and a debt service fee (excluding sinking funds) of N8.25 trillion.  

These projections were based on key economic assumptions   of $78 benchmark oil price per barrel,   1.78 Oil production (mbpd), an exchange rate of N750 per dollar , an inflation target of 21.4 percent and a Gross Domestic Product rate of 3.76 percent.