Increasing spending: FG’s three-year deficit hits N15.4tn amid revenue crisis
Within a three-year period covering July 2018 to June 2021, the Federal Government recorded a fiscal deficit of N15.35tn, statistics obtained from the Budget Office of the Federation have shown.
A fiscal deficit is a shortfall in a government’s income compared with its spending. The government that has a fiscal deficit is spending beyond its revenues.
The major sources of government revenue include oil revenue and non-oil revenue comprising of revenue from value added tax, company income tax, stamp duty and others.
A breakdown of the figures showed that in the second half of 2018, the Federal Government generated N1.78tn as revenue and spent a total of N3.75tn, resulting in a fiscal deficit of N1.97tn.
For the 2019 fiscal period, aggregate revenue generated in the first half of the year stood atN2.78tn but fell to N2.47tn in the second half.
Meanwhile, the expenditure incurred was N3.67tn in H1 2019 and N4.91tn in H2 2019, creating a fiscal deficit of N89bn and N2.44tn in both halves of the year respectively.
Further analysis revealed that the government in 2020 earned N3.53tn as aggregate revenue and spent N10tn, creating a fiscal deficit of N6.52tn.
The N3.53tn revenue generated in 2020 comprised of N1.76tn recorded in H1 and N1.77tn in H2.
Aggregate expenditure of N10bn showed that N4.69tn was incurred in H1 while N5.31tn was spent in H2.
The inability of the government to raise the much needed revenue to finance its operations resulted in a deficit of N1.37tn in the first quarter while the second, third and fourth quarter deficits were put at N1.54tn, N1.74tn and N1.86tn respectively.
The Overview of 2022 FGN Budget Call Circular report, the federal government’s retained revenue for H1 2021 was N2.23tn, which represented a N1.07tn shortfall of the prorated target of N3.3tn for the review period.
The total revenue comprises oil revenue of N492.44bn, non-oil tax revenue of N778.18bn. The non-oil revenue is made up of Company Income Tax of N397.02bn, Value Added Tax of N129bn and Customs collections of N234.02bn.