The 42 percent revenue shortfall recorded by the federal government due to the COVID-19 pandemic resulted in deficit spending of N1.29 trillion in the third quarter of 2020 (Q3’20).
Checks by Techeconomy.ng revealed that the deficit spending recorded in the period represents a slight increase when compared with the N1.25 trillion recorded in Q2’20.
The checks unveiled further that the lingering effect of COVID-19 on economic activity caused a 75 percent shortfall in the collection from the government’s independent revenue sources.
This medium obtained this from an economic report for Q3’20 released by the Central Bank of Nigeria (CBN).
The report stated that the government recorded N842.09 billion revenue in Q3’20 which is 42.3 percent less than the budget benchmark of N1.458 trillion.
According to the report: “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 percent and 47.0 percent 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.
“The prolonged revenue challenge of the FGN lingered in the review period, as the estimated retained revenue of the federal government at N842.09 billion fell short of the budget benchmark of N1.458 trillion by 42.3 percent.
“The shortfalls in the retained revenue of the Federal Government were attributed, largely, to the poor performance in collections from the FGN Independent Revenue sources, which at N56.21 billion, was 75.9 percent and 72.9 percent 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 “Given the need to rationalise its spending amidst subsisting fiscal constraints, the provisional aggregate expenditure of the FGN at N2.131 trillion, in third quarter of 2020, was lowered by 21.1 percent, 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 percent and 2.6 percent, respectively.
“The reduction in aggregate expenditure in the period was driven, largely, by a 45.3 percent drop in capital expenditure, relative to the budget benchmark.”