The Federal Government’s fiscal deficit hit N3.68tn in the first five months of 2023, a new report has revealed.
A report released by the Central Bank of Nigeria on the personal notes of the Monetary Policy Committee showed the committee was worried about rising low revenue amid high fiscal deficit.
The report quoted a members of the Monetary Policy Committee, Mike Obadan, as saying that the government needed to reform its expenditure to address the huge fiscal deficit.
Obadan, “The fiscal deficit of the country is a structural factor that has continued to drive inflation upwards. In the first five months of 2023, the Federal Government recorded a fiscal deficit of -N3.7tn and this has implications for inflation considering the monetary methods of financing it.”
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He added, “However, deeper and broader reform of public expenditure is imperative. The new government needs to beam its searchlight on the structure of public expenditure with a view to eliminating unproductive and wasteful expenditures.
“This means that the government should carry out meaningful fiscal consolidation to complement the Central Bank’s tight monetary policy stance aimed at reining in the apparently stubborn inflation.”
According to the economic report for Q1, 2023 released by the CBN, in first quarter of 2023, “A decomposition of FGN spending showed that recurrent expenditure, capital expenditure, and transfers accounted for 84.6, 9.8 and 5.6 per cent, respectively.”
An MPC member, Omamegbe, Mo’, stated that, “The combination of declining revenues and increasing expenditures has led to a growing fiscal deficit, necessitating borrowing and potentially fuelling inflationary pressures.
“The underperformance of the oil sector, coupled with unsustainable fuel subsidies, further exacerbates the fiscal issues.”