By 
Members of the Monetary Policy Committee (MPC) at the Central Bank of Nigeria (CBN) have foreseen a sustained reduction in the federal government’s fiscal deficit during the third and fourth quarters of 2023. This projection is founded on recent government efforts to enhance expenditure management and bolster both oil and non-oil revenues.
These insights were shared in their individual statements included in CBN MPC Communique 149.
Mr. Aliyu Ahmed, the Permanent Secretary at the Federal Ministry of Finance, Budget, and National Planning, stated, “The fiscal deficit is anticipated to decrease in the third and fourth quarters of 2023. This outlook is a result of recent endeavors by the new government to improve expenditure management and enhance oil and non-oil revenues.”
“With a focus on expenditure reprioritization and fiscal prudence at both the federal and state levels, there is an expectation that the government’s debt ratio may experience a marginal decline by the close of 2023.”
Discussing the fiscal sector, Prof. Adenikinju Adeola, a committee member, highlighted that government revenue and expenditure fell short of expectations between January and May 2023.
He noted that the Federal Government’s retained revenue amounted to N1.67 trillion, which was below the pro-rata target of N1.96 trillion due to the underperformance of receipts from the Federation Account Allocation Committee (FAAC) and gross independent revenue.
However, there was a positive aspect as he explained, “Total Federal Government expenditure as of May 2023 stood at N4.76 trillion, marking a 27.8% reduction compared to the budget estimate of N6.606 trillion. The main contributors to this shortfall were allocations for debt service, interest on Ways and Means, and capital expenditure.”
He also pointed out, “The overall budget deficit decreased by -18.15% during the first five months of 2023.”
Commenting on these developments, Prof. Obadan Mike, another MPC member, acknowledged the government’s earnest efforts to enhance revenue generation but expressed continued concerns regarding fiscal deficits and the subsequent accumulation of public debt.
Furthermore, MPC members collectively called for a review of the border closure policy to bolster food supply in Nigeria, given their apprehension about the declining growth of the agricultural sector in Q1’23.
Prof. Adenikinju asserted, “There is a need to reconsider the ongoing border closure to expand the supply of both food and non-food items in the economy, which could lead to a decrease in domestic prices, particularly food.”
Addressing the dwindling growth in the agricultural sector, Mr. Ahmed emphasized, “The contraction in agricultural sector growth is especially troubling, considering its pivotal role in food production and job creation.”
He further advocated for targeted interventions by fiscal and monetary authorities in the agricultural sector to secure medium to long-term food security and price stabilization. Ahmed also commended the recent initiative by the CBN to release grains from the national strategic grain reserves, which will help lower food prices. Additionally, he highlighted the potential of leveraging the African Development Bank (AfDB) Agro Pocket Wallet to support farmers in grain and fertilizer production.
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