Members of the Monetary Policy Committee, MPC, of the Central Bank of Nigeria (CBN) have projected a continuous decline in the federal government’s fiscal deficit in the third quarter and fourth quarter of this year (Q3, Q4 2023).
They based their projections on the recent efforts by the government to manage expenditures better and also improve oil and non-oil revenues.
This was revealed in their personal statements contained in the CBN MPC Communique 149.
In his statement, the Permanent Secretary, of the Federal Ministry of Finance, Budget and National Planning, Mr. Aliyu Ahmed, said: “The fiscal deficit is expected to decline in the third and fourth quarters of 2023 on the back of recent efforts by the new government to manage expenditures better and also improve oil and non-oil revenues.
“With expenditure reprioritization and fiscal wisdom at both the federal and state levels, there is an expectation that the government debt ratio may fall at least marginally by the end of 2023.”
Speaking on the fiscal sector, Prof. Adenikinju Adeola, a member, explained that both the government revenue and expenditure underperformed between January and May 2023.
He explained that the Federal Government retained revenue stood at N1.67 trillion, lower than the pro-rata target of N1.96 trillion due to the underperformance of Federation Account Allocation Committee (FAAC) receipts, and gross independent revenue.
However, on the positive side, he stated: “Total FGN Expenditure as of May 2023, was N4.76 trillion, 27.8 percent lower than the budget estimate of N6.606 trillion. The shortfall came mainly from allocation for debt service, interest on Ways and Means, and capital expenditure.
“Overall budget deficit reduced by -18.15 percent in the first five months of 2023’’.
“The underperformance of the budget is especially felt in the capital expenditures, thus impacting negatively on economic development”, he added.
On his part, another member, Prof. Obadan Mike, noted that although the new government is making serious efforts to boost revenue generation, fiscal deficits and associated public debt accumulation will continue to elicit deep concerns.
Meanwhile, the MPC members also called for a review of border closure to increase food supply in the country, while expressing concern about the decline in growth of the agricultural sector in Q1’23.
Adenikinju said: “The continuous closure of the borders should also be reviewed. This is to expand food and non-food supply to the economy and force down domestic prices, especially food.
Also expressing concern about the declining growth in the agricultural sector, Ahmed said: “The decline in growth in the agriculture sector is particularly worrisome, given its role in food production and employment generation.
“Targeted intervention by the fiscal and monetary authorities in the agriculture sector is crucial to ensuring medium to long-term food security and price moderation.
“Recent initiative by CBN to offload grains from the national strategic grain reserves to lower food prices could not have come at a more auspicious time.
“There is also a need to leverage the African Development Bank (AfDB) Agro Pocket Wallet to support farmers in the production of grains and fertilizers.”