Nigeria’s Budget Deficit Falls by 29% to N2.83 Trillion in Q1 2024

Nigeria’s budget deficit decreased by 29 percent in the first quarter of 2024, dropping to N2.83 trillion from N3.96 trillion in the same period in 2023, according to the Central Bank of Nigeria’s (CBN) latest quarterly bulletin. This reduction is attributed to increased government revenue and strategic financial measures, including a windfall tax on banks’ foreign exchange gains.

The CBN report shows that Nigeria’s revenue rose to N1.76 trillion in Q1 2024, up from N1.32 trillion in Q1 2023, while expenditure stood at N1.53 trillion. The improved fiscal balance is expected to enhance debt sustainability and enable greater investment in infrastructure and human capital development.

A recent report by FSDH Research highlights that the government’s increased revenue inflows, partly from a 50 percent windfall tax on banks’ foreign-currency revaluation profits in 2023, will contribute to further reducing the fiscal deficit. This tax was raised by the Senate to 70 percent, providing additional funds for critical spending.

The reduction in Nigeria’s budget deficit is considered a positive indicator which is expected to increased spending on capital projects, job creation, and poverty reduction.

Recall that President Bola Tinubu, during his nationwide broadcast concerning the recent Hunger Protest, highlighted some achievements of his administration on revenue and debt service.

“Coming from a place where our country spent 97 percent of all our revenue on debt service; we have been able to reduce that to 68 percent in the last 13 months,” Tinubu said, adding that an outstanding foreign exchange obligation of about $5 billion had been managed without adversely impacting government programs.

“This has given us more financial freedom and the room to spend more money on you, our citizens, to fund essential social services like education and healthcare. It has also led to our State and Local Governments receiving the highest allocations ever in our country’s history from the Federation Account,” the President said.