The federal government’s estimated fiscal deficit expanded to N620.49 billion in November 2020, compared with the N421.35 billion recorded in October 2020.
The Central Bank of Nigeria (CBN), in its monthly economic report for November 2020, that was posted on its website yesterday, said the high deficit was driven by the rise in personnel and overhead costs as provisional aggregate expenditure rose to N905.26 billion from N738.71 billion in the preceding period.
It stated that the rise in recurrent expenditure was due to the government’s quest to stimulate aggregate demand to mitigate the impact of the COVID-19 pandemic.
However, the provisional gross federal revenue increased by 7.2 per cent to N706.47 billion in November 2020, compared with the N6.556 billion recorded the previous month.
But the amount generated in November, when compared with the budget benchmark and the receipt in November 2019, representing a contraction by 16.6 per cent and 19.7 per cent respectively.
The increase was attributed to upticks in both oil and non-oil revenue components.
But the report showed that the federal government retained revenue stood at N284.76 billion in November 2020, indicating a significant drop of 36.3 per cent, relative to its level in the corresponding period of 2019.
According to the report, total federal government’s debt outstanding at the end of June 2020, was N31.009 trillion; with domestic and external components accounting for 57.6 per cent and 42.4 per cent of the total debt stock, respectively.
At N535.07 billion, it showed that the Federation Account revenue increased, relative to its level in the previous month, but fell below the benchmark of N621.12 billion and collections in the corresponding period of 2019, by 13.9 per cent and 21.6 per cent, respectively. “Though gross revenue from both oil and non-oil revenue outperformed the previous month, the increased cash call deductions, affected the distributable revenue in November 2020.
“The distributable revenue for November 2020 fell by 13.1 per cent, 21.6 per cent, and 13.9 per cent relative to its levels in October 2020, November 2019, and the budget benchmark, respectively.
“Consequently, the allocations to the three tiers of government also declined, relative to these comparable periods,” the report stated.
It noted that the increase in oil revenue in November 2020, was driven by the upturn in receipts from Domestic Crude/Gas Sales, which was 280.7 per cent and 6.5 per cent above its benchmark and the level in November 2019, respectively, due to increased demand arising from the easing of lockdowns in some countries.
“The growth in non-oil revenue in November 2020 increased by 5.9 per cent over the level in October 2020. This was, however, below the budget benchmark.
“The major driver of the increase in non-oil revenue in November 2020 was the receipt of N37.67 billion from stamp duty collections,” it stated.
The report said economic activities in November 2020 continued to gain momentum, following increased production by firms, with strengthening consumer demand.
“Nevertheless, the performance of the economy still reflected the lagged effects of the COVID-19 pandemic containment measures, which gave rise to persisting inflationary pressures, high uncertainties in crude oil price and production, as well as high uncertainty in business expectations.
“Consequently, the Gross Domestic Product (GDP) in 2020 third quarter contracted for the second consecutive time, plunging the economy officially into a recession.
“The economy was characterised by fragile business conditions, despite the growth recorded by more sectors relative to the previous quarter.
“The increase in the pump price of PMS and electricity tariff hike, during the period, impacted negatively on consumers’ welfare thus aggravating inflationary pressures, reducing consumers’ purchasing power, and worsening uncertainty in the business climate,” it added.
The report stated that the decrease in private and foreign investments exacerbated in the month under review due to the persisting uncertainty which dampened recovery prospects for businesses and corporates.