SAT APRIL 27 2024-theGBJournal| According to the Central Bank of Nigeria (CBN), the Federal Government’s (FG) fiscal deficit widened by 52.85% to N12.87 trillion (5.6% of GDP) in 2023FY (2022FY: N8.42 trillion or 4.22% of GDP) as a higher fiscal expenditure (40.70% to N18.84 trillion) outweighed increases in retained revenue (19.88% to N5.97 trillion).
The increase in fiscal revenue was primarily driven by revenue generated independently and exchange rate gains.
The increase in aggregate expenditure was driven by higher capital (130.69% to N4.36 trillion) and recurrent (25.83% to N11.50 trillion) expenditures.
Nevertheless, the 2023FY actual deficit was 6.60% lower than the budgeted deficit of N13.78 trillion as aggregate expenditure was lower than the approved budget expenditure of N24.82 trillion amid a lower-than-budgeted retained revenue of N8.63 trillion.
Looking forward, we expect FG’s retained revenue to underperform the budgeted estimate (NGN15.95 trillion) in 2024E, primarily due to the shortfall in oil revenue.
At the same time, we think higher debt service, given the hike in interest rates, will push up FG’s expenditure.
Overall, our baseline expectation is that the fiscal deficit will print N14.26 trillion or 5.37% of GDP (including GOEs) in 2024E.
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