FG year to April fiscal deficit hits N430 billion

June 18, 2014 | Filed under: Company News | Author: PATRICK ATUANYA

The CBN’s monthly report for April showed a deficit of N89bn on the FGN’s fiscal operations and a four-month (January – April) figure of N430bn suggesting some slippage in FG aims of fiscal consolidation.
“The 2014 budget projects a full-year deficit of N912bn,” said FBN Capital analysts led by Gregory Kronsten in a recent note.
“That said, performance is generally the worst, for different reasons, in the first and fourth quarters.”
The FGN has reported just one surplus in the past 13 months.
The monthly norm is a deficit for reasons frequently cited: poor revenue collection in both the oil and non-oil sectors, and an expenditure profile dominated by recurrent items, said Kronsten.
Recurrent spending (including statutory transfers) soared to 90 percent of the total in April. Mounting debt service payments were also a significant element in the spike recurrent expenditure.
The target for the full year is 74 percent although this excludes (unlike the series in the monthly report) the capital element of the transfers.
“The recurrent budget is vulnerable to the electoral agenda. However, it is already so large that any generosity on the FGN’s part on the scale of the salary rises ahead of the polls in 2011 is unlikely,” said Kronsten.
Distributions from the federation account made up 62 percent of the FGN’s retained revenue in April.
The total of N404bn was the highest in the 13-month period as a result of unusually high independent revenue (32 percent).