The federal government’s estimated retained revenue declined by 42.3 per cent to N842.09 billion in the third quarter of 2020, compared with a benchmark of N1.459 trillion.
This reflects the prolonged revenue challenge facing the country.
The Central Bank of Nigeria (CBN) disclosed this in its third quarter economic report for 2020 posted on its website.
The shortfall in revenue was attributed largely to poor performance in collections from the federal government’s independent revenue sources, which at N56.21 billion, was 75.9 per cent and 72.9 per cent below the benchmark of N233.21 billion and N207.34 billion in the corresponding period of 2019, respectively.
Also, projected receipts of N508.14 billion from ‘Other’ sources, including revenues from Special Account and Special Levies, were not realised in the review period, owing to the lingering effect of COVID-19 on economic activity.
In addition, the report noted that given the need to rationalise its spending amidst subsisting fiscal constraints, the provisional aggregate expenditure of the federal government at N2.131 trillion in third quarter of 2020, was lowered by 21.1 per cent, relative to the revised budget benchmark.
The estimated aggregate expenditure was marginally below the levels in the preceding quarter and the corresponding period of 2019, by 0.6 per cent and 2.6 per cent, respectively.
It stated that the reduction in aggregate expenditure in the period, was driven, largely, by a 45.3 per cent drop in capital expenditure, relative to the budget benchmark.
“Analysis of the components of aggregate expenditure revealed that recurrent expenditure maintained its dominance in total government spending, accounting for 77.4 per cent of total expenditure, with capital expenditure and transfers having shares of 16 per cent and 6.6 per cent, respectively.
“The stress on the fiscal space for the rest of the year is expected to moderate, anchored on the growth momentum in the global economy, and expected improvements in crude oil prices.
“Also, measures to curtail the COVID-19 pandemic and ensure rebound in economic activities are expected to revamp the economy.
“Given the narrow fiscal space and with little or no improvement in global economic conditions, additional borrowing by the federal government may not be ruled out, even with deliberate policy measures to diversify the revenue base and expand the tax net,” it added.
According to the report, the pressure witnessed in Nigeria’s external account persisted in the review period, despite global easing of economic activities. “Given declining revenue and relatively high expenditure profile, the fiscal operations of the FGN in the review period resulted in a provisional deficit of N1.289 trillion.
“This represented 3.6 per cent and 47 per cent increase above the revised budget benchmark and the level in the corresponding period of 2019, respectively.
“The deterioration in the overall fiscal deficit, relative to the budget benchmark followed increased government spending aimed at curtailing the negative effect of the COVID-19 pandemic and restarting growth, through social intervention programmes and stimulus packages, and reducing infrastructural deficits,” it added.