Nigeria’s fiscal deficit climbs higher to N824bn, says CBN

• Steep drop in consumer credit by 54% to N3.8trn

Business a.m. reporter

The Nigerian government’s fiscal deficit continued its upward trend in April 2024, with the Central Bank of Nigeria’s (CBN) latest economic report disclosing a 0.1 percent increase to N824.79 billion, compared to the N823.91 billion recorded in the previous month of March.

A fiscal deficit, according to analysts, refers to the situation where a government spends more money than it earns through taxes and other revenue sources. Fiscal deficits are a common occurrence in many economies, as governments often face pressure to increase spending on public services, infrastructure, and social safety nets, even as they strive to maintain a sustainable balance between revenue and expenditure.

The CBN’s latest economic report analysed the widening fiscal deficit faced by the federal government, with the deficit standing at N824.79 billion in April 2024, a 7.92 percent increase over the budgeted amount of N764.19 billion for the same period.

This budgetary overrun, according to the CBN, was primarily driven by a decline in retained revenue, which fell by 0.55 percent month-on-month to N419.91 billion in April from N422.23 billion in March, due to lower receipts from exchange gains.

The latest CBN report indicates that the federal government’s budget performance in April was characterised by an expansion in the fiscal deficit.

The report read: “Provisional data showed that primary and overall deficits rose to N260.98bn and N824.79bn, respectively, from N249.43bn and N823.91bn in the preceding month. The expanded deficit reflected the sharper decline in retained revenue.

“FGN retained revenue also dipped in the review period due to lower receipts from exchange gains.

“Provisional data indicated that, at N419.9bn, FGN retained revenue fell relative to the level in March 2024 and the monthly benchmark by 0.55 and 74.29 percent, respectively.”

In addition to the decline in revenue, the CBN report also highlighted a reduction in government expenditure for April, with a 0.16 percent month-on-month decrease to N1.246 trillion from N1.244 trillion in March. This decline in expenditure was primarily driven by a reduction in capital spending, as indicated by the provisional data provided by the apex bank.

The provisional data provided by the CBN revealed a slightly decreased spending pattern by the federal government during the month of April, with expenditure clocking in at N1.244.71 billion, a 0.12 percent decline from the previous month’s level and 48.10 percent below the projected spending of N2.398.12 billion.

The report attributed the fall in government spending largely to a reduction in capital outlays during the review period.

Furthermore, the breakdown of government spending showed that recurrent expenditures, which represent costs associated with the day-to-day running of the government, accounted for the majority of government spending at 84.5 percent.

According to the CBN report, consumer credit in Nigeria saw a steep decline in April 2024, with outstanding credit falling by a significant 53.83 percent to N3.8 trillion from the previous month.

This downturn in consumer credit, the report stated, was primarily due to a low appetite for loans among customers, fueled by high-interest rates.

The data showed a significant 60.79 percent drop in personal loans to N2.95 trillion. However, the report noted a contrasting trend in retail loans, which saw an 18.81 percent increase to N856.77 billion.

In a further analysis, the CBN report revealed that personal loans represented the majority of consumer credit outstanding at 77.48 percent, highlighting their importance in driving consumer spending in the Nigerian economy. Retail loans, which are typically used for the purchase of goods and services by individual consumers, accounted for the remaining balance of 22.52 percent.