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Nigeria recorded N2.29tr fiscal deficit in Q1

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Nigerian economy took a battering in the first quarter of 2021 as the country recorded a fiscal deficit of N2.293 trillion or 6.43 percent of the year’s quarterly GDP.

The Budget Office of the Federation (BoF) in its Budget Implementation Report for the first quarter of 2021 said that the “revenue and expenditure outturn of the Federal Government resulted in a fiscal deficit of N2.293 trillion during the quarter”.

The first quarter deficit the report said “was N1.070 trillion (87.51 percent) higher than the projected quarterly fiscal deficit of N1.222 trillion”.

“The 2021 fiscal deficit was also higher than the N1.377 trillion deficit recorded in first quarter of 2020” the Budget Office said.

According to the BoF, “the deficit was partly-financed through domestic borrowing of N550.0 billion”.

In the first quarter of 2021 also, the federal government said it spent N813 billion to service debt.

BoF in its report stated that “total debt service in the first quarter of 2021 stood at N813.10 billion, indicating an increase of N32.01 billion (4.10 percent) above the N781.10 billion projected for the quarter”.

The sum of N581.27 billion was used for domestic debt servicing while N231.83 billion was used for external debt service in the first quarter of 2021.

“The amount used for domestic debt servicing was N35.40 billion (6.48 percent) above the projection for the quarter” the BoF said.

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Also in the first quarter of 2021, a total of N384.52 billion was released and cash backed for the implementation of 2021 capital projects and programmes of Ministries Departments and Agencies (MDAs).

A total of N1.091.42 billion was received to fund the Federal Government of Nigeria (FGN) budget in the said period. This comprised of N299.33 billion (27.43 percent) oil revenue and N792.09 billion (72.57 percent) non-oil revenue.

The amount received was N905.19 billion (45.34 percent) below the quarterly budget projection and N99.17 billion (9.99 percent) above the N992.25 recorded in the first quarter of 2020.

Based on what was received to run the government, the Budget Office of the Federation in its report said “the FGN continued to implement public expenditure reform initiatives during the period”.

This reform includes “the roll-out of the Integrated Payroll and Personnel Information System (IPPIS) to higher institutions and the introduction of the Bottom-up Cash Plan Module”.

Total expenditure of government in the first quarter of 2021 stood at N3,384.66 billion representing N502.29 billion (17.43 percent) and N1.014 trillion (42.80 percent) above the N2.882 trillion quarterly projection and N2.370 trillion reported in the first quarter of 2020 respectively.

A total of N1.096 trillion was spent on non-debt recurrent expenditure in the first quarter of 2021. This represents a decrease of N313.99 billion (22.26 percent) and N50.79 billion (4.43 percent) below the quarterly estimate of N1.410 trillion and N1.147 trillio recorded in the first quarter of 2020 respectively.

Statutory Transfers to first line charge institutions of government received N124.13 billion during the review period.

Overall, the report noted that “the nation’s economy grew by 0.51 percent in the first quarter of 2021, a sign that the Nigerian economy had recovered from the second recession in four years after posting two consecutive positive GDP growth in two quarters”.

“The fragile economic performance in the quarter under review was due to the effectiveness of some measures put in place to curtail the negative impact of the COVID-19 pandemic on the economy” the report said.

On an optimistic note the BoF maintained that “owing to the recent rise in global economic activities, leading to the rise in crude oil demand and price and coupled with the various stimulus economic packages being implemented by the Federal Government, it is expected that the economy will continually improve in subsequent quarters of 2021”.

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