Nigeria’s revenue allocation drops in Q4 2020 due to N1.48tn deficit

The Central Bank of Nigeria (CBN) has stated that fiscal deficit of N1.48 trillion was recorded by the Federal Government in the fourth quarter of last year.

The CBN stated that the low demand of crude oil and COVID-19 had caused the fall.

The apex bank said the total federally collected revenue for the period under review was N2.2 trillion, while the provisional aggregate expenditure of the federal government was N2.38 trillion.

In the economic report of the CBN, 44.6 percent and 55.4 percent were respectively contributed by the oil and non-oil revenue sources. The monetary policy regulator stated that the generated revenue was 13.1 percent and 8.3 percent below budget benchmark and the level in the third quarter.

Nigeria’s agreement with the Organisation of Petroleum Exporting Countries (OPEC) to cut oil production output negatively impacted the revenue level. Also low oil demand and the consequences of the pandemic weighed heavily on the revenue.

The deficit affected the amount disbursed to the three tiers of government. It was gathered that disbursement was 13.1 percent lower than the amount shared during the same period in 2019, and 7.9 percent below the quarterly benchmark.

“At N2.2tn, federally collected revenue in the fourth quarter of 2020 fell by 13.1 per cent and 8.3 per cent below the budget benchmark and the level in the preceding quarter respectively and was also 16.8 per cent below the collections in the corresponding period of 2019.

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“Oil receipts accounted for 44.6 per cent of the total collection, while non-oil constituted the balance of 55.4 per cent. The relatively low receipts recorded in the review period underscored the lingering effect of the COVID-19 pandemic on domestic and global economic activities.

“Similarly, the retained revenue of the Federal Government of Nigeria at N903.52bn, fell by 38.1 per cent and 39 per cent below its quarterly benchmark and collections in the fourth quarter of 2019 respectively.

“Also, the provisional aggregate expenditure of the FGN declined from N2.54tn in the third quarter of 2020 to N2.38tn in the review period, reflecting decreases in government spending, in the light of the current revenue challenge.

“Consequently, the fiscal operations of the FGN resulted in an estimated deficit of N1.48tn.”

The report stated that N756.86 billion was deducted from the N2.2 trillion, for statutory and non-federation transfers. This reduced the revenue generated to N1.45 trillion.

The report stated that excess oil revenue, non-oil excess revenue, and exchange gain produced N264.80 billio, thereby, increasing the revenue to N1.72 trillion, out of which N1.71 trillion was shared among the federal, state and local governments.

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