Nigeria's Fiscal Deficit Surges to N13.50 Trillion in 2023, Exceeding Revenue by Over Three Times

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Source: BusinessDay 

The Federal Government of Nigeria faced a daunting fiscal challenge in 2023, recording a staggering deficit of N13.50 trillion. According to BudgIT, a civic tech organization, the government's revenue for the year stood at N5.99 trillion, while its expenditure soared to N19.50 trillion—more than three times its earnings.

A fiscal deficit arises when a government's total spending surpasses its revenue within a given year, necessitating borrowing to bridge the gap. This inevitably contributes to the nation’s escalating debt burden.

In a statement released on their X (formerly Twitter) account, BudgIT cited the 2023 Fiscal Accounts Report by the Accountant General of the Federation, highlighting the alarming financial imbalance. Specifically, the deficit accounted for 225% of the total revenue generated by the government.

Breaking down the revenue sources, BudgIT noted that N3.80 trillion was obtained from the Federation Account Allocation Committee (FAAC), while the Federal Government's independent revenue sources contributed N1.98 trillion. Additionally, N2.39 trillion came from the Federal Government's share of the Federation Account, N715.75 billion was derived from exchange rate differences, and N441.87 billion was generated through Value Added Tax (VAT).

However, despite these inflows, the government's fiscal obligations were largely dominated by debt servicing, which consumed 43.9% of the budget, amounting to N8.56 trillion. This substantial debt servicing expenditure underscores the ongoing reliance on borrowing to fund the nation's budget.

Non-debt recurrent spending accounted for 27.8% of the budget, or N5.42 trillion, while capital expenditure, which includes critical investments in infrastructure like schools and hospitals, received a mere N4.49 trillion—representing just 23% of total spending.

BudgIT emphasized the government's increasing deviation from fiscal prudence, as it continues to accumulate debt faster than it generates revenue. This unsustainable approach has led to a significant deficit, further straining Nigeria's financial stability.

As the country grapples with these fiscal challenges, the burden of debt servicing continues to overshadow other vital areas of governance, raising concerns about the long-term implications for Nigeria's economic future.


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