| Nigeria Economy |    1097 VIEWS  |
| Nigeria Economy | |
| 1097 VIEWS | |
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Tuesday, December 29, 2020 / 09:24 AM / By FBNQuest Research / Header Image Credit: Bloomberg
The
FGN's revenue has crashed dramatically this year due to the spread of Covid-19,
the official response to contain its impact and the related decline in the oil
price. These broad trends we noted in our pre-holiday daily note on gross,
federally collected revenue for the three tiers of government (Good Morning
Nigeria, 24 Dec. '20). In the FGN's case, collection of just NGN842bn in Q3 '20
was far short of the benchmark of NGN1.46trn. In addition to sharp falls in
federal collection translated into retained revenue, there were zero 'other' receipts whereas the target was NGN508bn for special levies and transfers from
special accounts.
The FGN has set ambitious targets even
after twice revising its budget numbers in the face of Covid-19. Not for the
first time, it has had to adjust its spending plans mid-year because of
underperformance on the revenue side. Aggregate expenditure of N2.13trn in Q3
was 21.2% down on the benchmark (ie the approved budget, pro rata).
The data point to a predictable
reduction in capital spending (NGN341bn in the quarter vs the benchmark of
NGN622bn).
However, we also see some compression
of recurrent expenditure, which totalled NGN1.65trn vs the benchmark of
NGN1.97trn.
Remarkably, personnel spending of
NGN669bn in Q3 fell short of the NGN762bn benchmark. It could well prove that
the shortfall is smoothed out in Q4.
The brightest point in the data is the
interest payment bill of NGN560bn, which compares with the year-earlier figure
of NGN812bn and the benchmark of NGN738bn. The CBN commentary notes the
moratorium on interest payments by some official creditors, which we take to be
a reference to the G20 initiative. There has also been a marked decline in the
FGN's domestic issuance costs.
More detailed but less timely data from
the Budget Office of the Federation and the Office of the Accountant-General of
the Federation highlight additional interest payments of NGN461bn on Ways and
Means in H1 '20. This appears to be the cost to the FGN of servicing its 'unfunded' overdraft with the CBN.
The FGN's deficit in Q3 amounted to
NGN1.29trn, compared with NGN1.25trn the previous quarter and the benchmark of
NGN1.24trn.
This CBN data series, as we have
previously observed, is regularly revised, and sometimes by a wide margin.
FGN finances (NGN bn)
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Sources:
CBN; FBNQuest Capital Research |
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