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FGN deficit 50% higher in 2016; Widened from N1.50trn to N2.35trn

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Monday, April 10, 2017/ 9.44 AM / FBNQuest Research 

The FGN deficit widened from N1.50trn to N2.35trn (US$930m) in 2016, and so was comfortably within the 3% of GDP threshold set in the Fiscal Responsibility Act of 2007. Retained revenue was 10.1% lower than the previous year at N2.97trn, and total spending 10.7% higher at N5.32trn.  

The deterioration has several origins: we would focus on the challenge of collecting non-oil revenue in a recession. The data are published in the CBN’s Quarterly Statistical Bulletin for Q4 2016, and drawn from the Office of the Accountant General of the Federation. 

On a calendar year basis, capital expenditure increased from N818bn in 2015 to N919bn. The FGN has already noted the rise in such spending in the 2016 budget year, which started late and is still running due to the impasse in the National Assembly (Good Morning Nigeria, 29 March 2017). 

The FGN managed one small monthly surplus of N84bn in January. There was no seasonal pattern to the deficits, which peaked in February (N406bn), April (N369bn) and December (N383bn). 

The Economic Recovery and Growth Plan 2017-20 projects revenue of N4.68trn, expenditure of N6.92trn (including N1.95trn on capital items) and a deficit of N2.23trn. 

Viewed from the outturn in 2016, these are heady targets for revenue generation and capital releases.

One local newspaper chose last week to comment upon the FGN public finances for 2016 as cited by another CBN source, the Financial Stability Report. This showed a much higher deficit of N3.21trn, which breached the 3% threshold in the 2007 law. 

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