LAGOS — In spite of increase in federally-collected revenue, buoyed by increase in crude oil price, the Federal Government recorded a deficit of N404 billion for the month of February, 2017.
The Central Bank of Nigeria, CBN, disclosed this in its economic report for February posted on its website, yesterday, indicating another threat to the budget.
The report among other things showed that banks borrowed N4.2 trillion from the apex bank during the month, while they paid N3.2 billion as interest to the apex bank.
The report stated: “The estimated Federal Government retained revenue for the month of February 2017, at N194.38 billion, was below the 2017 provisional monthly budget estimate of N337.48bn and the receipts in January 2017 by 42.4 per cent and 5.9 per cent, respectively. Of the total receipt, Federation Account accounted for 68.5 per cent, while Exchange Gain, FGN Independent Revenue, VAT, Excess Crude, and NNPC refund accounted for 11.6, 6.5, 5.4, 4.7, and 3.3 per cent, respectively.
“The estimated total expenditure of the Federal Government stood at N599.30b, exceeding both the 2017 provisional monthly budget estimate of N522.64bn and January 2017 level of N552.74bn by 14.7 and 8.4 per cent, respectively. Recurrent and capital expenditure, accounted for 64.9 and 30.5 per cent, respectively, while transfers accounted for the balance of 4.6 per cent of the total expenditure. A breakdown of the recurrent expenditure showed that non-debt obligation was 79.3 per cent of the total, while debt service payments accounted for the balance of 20.7 per cent.
“Thus, overall, the fiscal operations of the Federal Government resulted in an estimated deficit of N404.92b, compared with the 2017 provisional monthly budget deficit of N185.16b.
“Federally-collected revenue (gross) in February 2017 was estimated at N545.05b. This fell short of the 2017 provisional monthly budget estimate of N792.71b by 31.2 per cent, but was higher than the receipts in January 2017 by 20.4 per cent. The increase, relative to the preceding month level was attributed to the rise in receipts from both oil and non-oil components
“Gross oil receipts, at N292.82b or 53.7 per cent of total revenue, fell below the provisional monthly budget estimate by 0.6, but was 37.9 per cent higher than the receipts in January 2017. The increase in oil revenue relative to the preceding month reflected the significant rise in receipts from domestic crude oil/gas sales and PPT/Royalties.
“At N252.24bn or 46.3 per cent of the total revenue, gross non-oil revenue was below the 2017 provisional monthly budget estimate of N498.14bn by 49.4 per cent. It, however, exceeded the receipts in January, 2017 by 4.9 per cent. The poor performance relative to the provisional budget reflected the shortfall in most of the components due to the low economic activities in the country during the review period.”
FG’s February deficit is alarming-Expert
Commenting on the fiscal activity of the Federal Government in February, Managing Director/Chief Executive, Cowry Assets Management Limited, a Lagos-based investment firm, described the N404b deficit as alarming, saying this could lead to a deficit of N4 trillion for 2017. His words: “That the Federal Government recorded deficit is not strange because we know that the Federal Government has been borrowing through FGN bonds, Eurobond and treasury bills. What is strange and of concern is the level of deficit. The N404b deficit in one month is alarming, and if this pace is maintained, we might end up with N4.4 trillion deficit for the year. The budget deficit for the year is N2.3 trillion, amounting to average monthly deficit of amount N230b. You can see that the N404b February deficit is also twice the expected average.”
Banks borrows N4.2 trillion from CBN
The report showed increased reliance by banks on the CBN’s lending facility during the month. It showed that banks borrowed N4.3 trillion from the apex bank while they paid N3.2b as interest on the loan.
It stated: “The Deposit Money Banks, DMBs and merchant banks continued to access the Standing Facility window to square up their positions via either borrowing from the CBN or depositing of excess as reserves at the end of each business day. The trend showed more patronage for the standing lending facility. Applicable rates for the standing lending facility, SLF and standing deposit facility, SDF, remained at 16.00 per cent and 9.00 per cent, respectively.
“Total request for SLF (including Intra-day lending facilities, ILF, converted to overnight repo) amounted to N4,266.74b (made up of N696.31b direct SLF and N3,570.43b ILF converted to overnight repo), with a daily average of N224.57b. The bank earned N3.29b in interest income, compared with SLF of N3.38b and interest income of N2.683b in January 2017. Total standing deposit facility, SDF, granted during the review period was N742.62b with a daily average of N39.09b, compared with N1,855.98b in January 2017. The cost incurred on SDF in February 2017 was N218.39m, compared with N633.32b in January 2017.”
Banks’ assets decline
The report stated that: “Total assets and liabilities of the commercial banks amounted to N32,120.2b, showing a 0.53 per cent decline below the level at end-January 2017. Funds were sourced, mainly, from drawdown on reserves. The funds were used, largely, to extend credit to the Central Government.
Banks’ credit to the domestic economy, at N21.817b, rose by 1.2 per cent, above the level at end-January 2017. The development was attributed to the 4.8 per cent and 0.2 per cent increase in claims on the Federal Government and claims on the private sector, at the end of the review month.
“The net foreign assets, NFA of the banking system declined in the review month as the effect of foreign assets revaluation withered. Relative to the level at end-January 2017, NFA, at N8,546.70b fell by 11.2 per cent, in contrast to the 8.3 per cent and 1.5 per cent growth in the preceding month and the corresponding period of 2016, respectively. The development reflected the fall in CBN’s foreign currency deposits and foreign currency holdings of commercial banks. Relative to the level at end-December 2016, NFA fell by 3.9 per cent, reflecting the fall in foreign asset holdings of the CBN and banks.”
Source – Vanguard
THE ROTTEN FISH: CAN OF WORMS OPENED OF APC & TINUBU'S GOVERNMENT OVER NIGERIA'S ECONOMIC DOWNTURN
WATCH THE CRITICAL ANALYSIS AND KNOW THE RESPONSIBLE PARTIES TO BLAME FOR NIGERIA'S ECONOMIC CHALLENGES, WHILE CITIZENS ENDURE SEVERE HARDSHIPS.Watch this episode of ISSUES IN THE NEWS on 9News Nigeria featuring Peter Obi's Special Adviser, Dr Katch Ononuju, 9News Nigeria Publisher, Obinna Ejianya and Tinubu Support Group Leader, McHezekiah Eherechi
The economic crisis and hardship in Nigeria are parts of the discussion.
Watch, leave your comments, and share to create more awareness on this issue.
#9NewsNigeria #Nigeria #issuesInTheNews #politics #tinubu THE ROTTEN FISH: CAN OF WORMS OPENED ...
DON'T FORGET TO SUBSCRIBE AND LEAVE YOUR COMMENTS FOR SUBSEQUENT UPDATES
#9newsnigeria #economia #economy #nigeria #government @9newsng
www.9newsng.com