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Why Nigeria’s revenue fell by 52 percent August 2021: Report

Mr. Godwin Emefiele, Governor of CBN

*The Central Bank of Nigeria’s economic report indicates the significant drop in aggregate expenditure outweighed the impact of low revenue outcome on the fiscal balance in August 2021, which led to a 25.2 percent decline in fiscal deficit, from N541.8bn July to N405.3billion August

Alexander Davis | ConsumerConnect

The Central Bank of Nigeria (CBN), in an economic report has explained how the Federal Government recorded a fiscal deficit of N405.28billion August 2021.

According to the report, the government’s aggregate expenditure was N781.61billion whereas retained revenue was estimated at N376.33billion, even as independent revenue dropped by 52.2 percent August.

The Bankers’ Bank stated that development led to a 10.4 percent decline in Nigerian Government’s retained revenue from N420.2billion July this year.

The report said: “The Federal Government recorded reductions in all its revenue components. Significant decline in independent revenue sources reflected lower remittances from ministries, departments, and agencies and government business interests.”

Besides, the Bank however, noted in the report that statutory receipt from the Federation account increased by 6.2 percent to N299billion August, significantly impacting the government’s retained revenue during the review period.

It said the aggregate expenditure fell by 18.8 per cent from N962.1billion recorded in July due to a reduction in overhead cost and low capital expenditure in the economy.

According to the report, “although recurrent expenditure shrunk by 18.3 percent to N683.46billion following a 48.9 percent decline in overhead cost, it maintained its dominance in total spending.

“Recurrent expenditure accounted for 87.4 percent of total spending in August, while capital expenditure and transfers constituted 7.3 percent and 5.3 percent, respectively.”

The CBN attributed the low allocation to capital expenditure to the lag in capital releases during the period.

The significant drop in aggregate expenditure outweighed the impact of low revenue outcome on the fiscal balance August, which led to a 25.2 percent decline in fiscal deficit, from N541.8bn July to N405.3billion August, said the report.

In regard to trade performance, the CBN said that Nigeria recorded a higher trade deficit of $820million in August, when compared with $340million in July.

The Bank further said: “Aggregate export receipts decreased by 4.7 percent to $4.24billion in the review period, compared with $4.45billion in the preceding period, owing to lower receipts from crude oil export.

“Merchandise import grew by 5.5 percent to $5.06billion in August, from $4.80billion in the preceding month, reflecting increased domestic demand for both petroleum and non-oil-related products, occasioned by an uptick in domestic economic activities.”

The report also noted that crude oil and gas exports declined by 5.4 percent to $3.78billion July, due to inventory build-up in the United States (US), reinforced by the resurgence of the COVID-19 infections.

Non-oil export earnings, however, grew to $460m in August from $450m in July, according to the report.

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