CBN report shows FG’s three-month expenditure exceeds revenue by N1.43trn



Uba Group

Data from the Central Bank of Nigeria at the weekend revealed that in the first three months of 2023, the Federal Government of Nigeria’s expenses surpassed its revenue by N1.43 trillion.

The CBN’s economic report for the third quarter of 2023 shed light on these concerning financial figures.

It stated, “The fiscal operations of the Federal Government of Nigeria (FGN) in the first quarter of 2023 resulted in a deficit. At N1.43trn, the provisional fiscal deficit of the FGN was 9.6 percent higher than the level in the preceding quarter but 22.1 percent below the target.”

The report attributed this fiscal challenge to a decline in oil revenue, which impacted the government’s income.

As a result, the retained revenue of the FGN dropped by 10.7 percent compared to the previous quarter of 2022, and it fell short of the quarterly target by 46.1 percent.

Furthermore, the report highlighted that the FGN’s aggregate expenditure also decreased by 1.3 percent compared to the previous quarter and by a substantial 36.0 percent in comparison to the quarterly target.

Despite this widening deficit, the CBN’s report noted that the overall fiscal gap, while larger than the fourth quarter of 2022, was 22.1 percent narrower when compared to the proportionate budget.

Regarding Nigeria’s consolidated public debt, as of the end of December 2022; it stood at N46.25trn, which represented 22.8 percent of the Gross Domestic Product.

Gross federation revenue, according to the CBN report, amounted to N3.48trn, falling short of the levels in the fourth quarter of 2022 and the budget benchmark by 0.4 percent and 26.6 percent, respectively.

“As a result, the retained revenue of the FGN dropped by 10.7 percent compared to the previous quarter of 2022, and it fell short of the quarterly target by 46.1 percent”

Non-oil revenue continued to be the dominant source of government income, making up 61.4 percent, while oil receipts contributed 38.6 percent.

Oil revenue, at N1.34trn, experienced a 3.0 percent decline compared to the fourth quarter of 2022 and a substantial 43.5 percent drop relative to the quarterly target.

This decline was mainly due to revenue shortfalls from petroleum profit tax and royalties, resulting from lower domestic crude oil production.

Conversely, non-oil receipts improved slightly against the preceding quarter by 1.2 percent but fell short of the quarterly target by 9.6 percent, totaling N2.14trn.

Experts have raised concerns about accountability and economic implications of the Nigerian Senate’s approval of an increase in the Federal Government’s borrowing limit from the CBN.

The Senate on May 27 made changes to a law, permitting the Federal Government to obtain additional funds from the CBN.

The legislature, in an emergency session, adopted changes that will permit an increase in its overdraft at the CBN.

Under Section 38 of the CBN Act, the Federal Government is granted the authority to borrow from the apex bank but such overdraft should not surpass five percent of the government’s revenue from the previous year.


With the revised law, the overdraft limit will be raised from 5 percent to 15 percent of the previous year’s revenue.

Many Nigerians have raised concerns about the decision, with many expressing fear that it may have significant implications for the country’s economy and debt profile.

An economist, Tope Fasua argued that the increased borrowing capacity will not significantly affect monetary policy, noting that it was an additional monetary intervention by the CBN.

Fasua noted that Nigeria has not borrowed beyond its threshold when compared to other nations, adding that there is urgent need to focus on revenue generation and leverage on the country’s balance sheet for development.

He said, “It will not have a lot of negative impact on monetary policy because the matter of ways and means is just a small subset of what the central bank does, which is different from monetary policy.

“The truth is that every country leans on its central bank, especially in times of global downturns. 5 percent seems small given our past experiences and the experiences of other countries. So I support the increase given that it is an extra monetary intervention of the central bank.”

The Director of the Centre for the Promotion of Private Enterprise, Muda Yusuf said the increased limit may not have a significant impact on the economy.

However, he raised concerns about the government’s ability to adhere to the set limit and maintain discipline.

“It (the new limit) is not going to have any significant impact because before now what was in practice was between 30 and 50 percent of actual revenue. There is already a very wide variance in terms of the violation of the Act so, if we are moving it from 5 percent to 15 percent, that is not anything that can cause any major macroeconomic problem,” he said.

Yusuf warned against the practice of expending funds without proper appropriation and then seeking approval retroactively, describing it as a messy situation.

But the Chief Executive Officer of Dairy Hills, Kelvin Emmanuel, argued that the National Assembly’s decision to amend sections 38(2) without conducting proper oversight functions, including audits, hearings, and investigations, indicates a lack of understanding of their responsibilities.

He emphasized the importance of accountability and thorough examination of the impact on monetary policy.

“I will recommend that the new president should decline assent to the amendment,” he said.

The Nigerian government has in recent years relied on advances from the CBN to shore up the deficit amid dwindling revenue.

Before the expiration of his tenure, former president Muhammadu Buhari requested the Senate to approve the securitization of the CBN’s N22.7 trillion debt by converting it to a 40-year bond.