The federal government has recorded the sum of N2.23 trillion fiscal deficit in the fourth quarter (Q4) of 2021, the Central Bank of Nigeeia (CBN) has said.
CBN, said this in its economic report for the fourth quarter of 2021.
A fiscal deficit is a shortfall in a government’s income compared with its spending. By implication, a high fiscal deficit means that the government is spending beyond its means.
The report showed 12 per cent contraction in fiscal deficit followed a decline in aggregate expenditure in the fourth quarter of 2021, while non-oil revenue maintained its dominance, accounting for 60.8 per cent.
The report said: “Following a decline in aggregate expenditure in the fourth quarter of 2021, the fiscal deficit of the FGN contracted by 12.0 per cent to N2,232.33 trillion, relative to the preceding quarter.
“Non-oil revenue maintained its dominance, accounting for 60.8 per cent of the total collections, while oil revenue constituted the balance of 39.2 per cent.
“Provisional federal government of Nigeria (FGN) retained revenue, at N1,265.34 trillion, declined by 36.6 per cent and 3.2 per cent, relative to the budget benchmark and the preceding quarter, respectively, reflecting the persistent revenue challenge over the past two years.”
The report further indicated that the federation receipts in the fourth quarter fell below benchmark due to the shortfalls in oil revenue.
“The shortfalls were largely the result of poor performances in some oil revenue components. Non-oil maintained its dominance of gross federation receipts in the period, accounting for 60.8 per cent of the total collections, while oil revenue constituted the balance of 39.2 per cent.
“This is a deviation from the 51:49 non-oil versus oil revenue mix, projected in the 2021 budget.
“Federation receipts in the fourth quarter of 2021 declined, following shortfalls in oil revenue. At N2,844.73 trillion, provisional federation receipts fell below the quarterly benchmark and the level in the preceding quarter by 7.5 per cent and 0.7 per cent, respectively,” the report added.
Also in the report, growth prospects for the Nigerian economy remain positive but fragile in the near term, on the back of a rebound in manufacturing activities, improvements in vaccination rates, and the supportive impact of CBN interventions on growth-enhancing sectors.
The CBN, however, said the lingering security challenges and the delayed implementation of the Petroleum Industry Act (PIA) are the major downside risks to the outlook.
President Buhari transmits Business Facilitation bill to N’Assembly
The Senate has received the Business Facilitation (Miscellaneous Provisions) Bill 2022, forwarded to the National Assembly by President Muhammadu Buhari, for consideration and passage.
The bill was accompanied by a letter dated 17th June, 2022.
The letter, addressed to the Senate President, Ahmad Lawan, was read during plenary on Tuesday.
President Buhari, in the letter, explained that the expeditious consideration and passage of the bill would promote the ease of doing business in Nigeria.
It reads, “Pursuant to Sections 58(2) of the 1999 Constitution of the Federal Republic of Nigeria (as amended), I forward herewith the Business Facilitation (Miscellaneous Provision) Bill 2022 for the kind consideration of the Senate.
“Business Facilitation (Miscellaneous Provision) Bill 2022 seeks to promote the war of doing business in Nigeria by amending relevant legislation.
“While hoping that this submission will receive the usual expeditious consideration of the Senate, please accept, Distinguished Senate President, the assurances of my highest consideration.”
N5 trillion urgently needed to cushion effects double digits increase on ordinary Nigerians – World Bank
The World Bank has warned that Nigeria could lose about N5trillion in 2022 from gasoline subsidies.
The bank also said that N5 trillion is urgently needed to cushion ordinary Nigerians from the crushing effect of double-digit increases in the cost of basic commodities.
The World Bank said in it Nigeria Development Update (NDU) released on Tuesday in Abuja.
The report said: “When we launched our previous Nigeria Development Update in November 2021, we estimated that Nigeria could stand to lose more than N3 trillion in revenues in 2022 because the proceeds from crude oil sales, instead of going to the federation account, would be used to cover the rising cost of gasoline subsidies that mostly benefit the rich”.
World Bank Country Director for Nigeria Shubham Chaudhuri, however noted: “Sadly, that projection turned out to be optimistic. With oil prices going up significantly, and with it, the price of imported gasoline, we now estimate that the foregone revenues as a result of gasoline subsidies will be closer to 5 trillion Naira in 2022.
“N5 trillion is urgently needed to cushion ordinary Nigerians from the crushing effect of double-digit increases in the cost of basic commodities, to invest in Nigeria’s children and youth, and in the infrastructure needed for private businesses small and large to flourish, grow and create jobs.”
The report noted: “Nigeria is in a paradoxical situation: growth prospects have improved compared to six months ago but inflationary and fiscal pressures have increased considerably, leaving the economy much more vulnerable”.
Nigeria’s banking sector now immune to economic shock – NDIC
Nigeria Deposit Insurance Corporation (NDIC) has said that the banking sector is now immunized to withstand shocks that may impact the economy and the financial system.
Mr Bello Hassan, Managing Director of NDIC said this at a retreat for members of the Senate Committee on Banking, Insurance and other Financial Institutions with the NDIC, in Lagos.
Any change in fundamental macroeconomic variables or relationships that has a significant impact on macroeconomic outcomes and measures of economic performance, such as unemployment, consumption, and inflation, is referred to as an economic shock.
Mustapha Ibrahim, Executive Director (Operations), who represented the NDIC boss, said Nigerian banking industry was currently resilient to most of these difficulties, particularly external shocks over which the Corporation had no control.
He said: “We have tried to immunise the system to withstand shocks that may be impacting on the economy and the financial system”.
Hassan, further said that effective risk-based management remained critical to a safe and sound financial system.
“The NDIC and the Central Bank of Nigeria have a very robust supervisory framework under the risk-based supervisory format the risk-based approach is actually proactive. For the most part, we try to anticipate all these risks – Macro, micro, domestically and globally – to address them continuously.
“So, it is so dynamic that we also are constantly on a real-time basis, monitoring the industry continuously and fine-tuning our supervisory tools, both onsite and offsite, to mitigate some of the challenges the banks may be facing,” he said.
On his part, Chairman, Senate Committee on Banking, Insurance and Other Financial Institutions, said the retreat demonstrated progress in creating lasting and workable relationships in the national interest.
Sani, who was represented by Senator Olubunmi Adetunbi, was optimistic that the outcome will aid in the strengthening of the financial and banking sectors, particularly the corporation’s supervisory and regulatory role.
“The National Assembly and NDIC are key institutions critical to the growth and development of the Nigerian economy. While we provide the legal and institutional frameworks, NDIC carries out its regulatory or supervisory responsibilities in order to safeguard the banking sector.
“Engagement of this nature gives us the platform to deeply look into our activities and responsibilities and also examine how far we have gone in carrying out our mandate as required. It helps in injecting fresh ideas into our operations which will materialise into an improved, effective and efficient service delivery to Nigerians,” he said.
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