The imperative of expenditure compression

Proshare

Tuesday, July 12 2016 9:22AM /FBNQuest Research 

The OAGF has published the FGN’s consolidated income and disbursement account for April. Not to be compared on a like-for-like basis with the FGN’s fiscal performance shown in the CBN’s quarterly and monthly reports, the account nonetheless highlights the many strains on the public finances.

We do not comment on the outturn in relation to the projections since the account makes comparisons with the approved 2015 budget. That said and viewed only from the expenditure side, the strains are clearly considerable.

Since personnel costs (excluding pension dues) accounted for 41% of all disbursements of N1.55trn over the four-month period, we can understand why the federal finance ministry has seconded 300 accountants from the OAGF to carry out a rolling audit of the payroll.

The 27% share of domestic debt service in total disbursements explains the thrust of the DMO’s Debt Management Strategy, 2016-19, which targets a 60/40 blend for the FGN’s domestic and external obligations (Good Morning Nigeria, 22 June 2016). The mix at end-2015 was as high as 84/16.



The account puts capital releases from 2015 and this year at N91bn in four months. The FGN has since announced the release of N253bn to the MDAs.

The cumulative deficit of N891bn should be viewed in the context of the 2016 budget projection of N2.20trn.
 

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