The Central Bank of Nigeria has said that Nigeria’s fiscal deficit between January and March 2020 stands at N1.39tn.
According to data obtained from the CBN, the N1.39tn is contained in the personal statement of a member of the CBN Monetary Policy Committee, Obadan Idiahi.
A government experiences a fiscal deficit when it spends more money than it takes in from taxes and other revenues, excluding debt, over a particular period of time, he added.
Idiahi said the negative impact of the Coronavirus Disease on the economy manifested in very serious challenges for the Nigerian economy, as major macroeconomic aggregates had deteriorated.
The economy, he noted, is on the verge of stagflation.
Against the backdrop of significant revenue under-performance and the weakening of revenue-generating capacity induced by the COVID-19 pandemic, the MPC member said the need to contain the pandemic and save livelihoods had constrained the adjustment that would have been necessary under the situation of revenue shortage.
Consequently, Idiahi said fiscal deficits had increased with implications for increased domestic and external borrowing as well as public debt build-up.
Specifically, he said as at March 2020, the Federal Government’s fiscal deficit stood at N1.39tn.
With domestic borrowing through bonds at N560bn as financing, the net overall unfinanced deficit stood at N832.96bn.
“In the recently revised 2020 budget, occasioned by the crude oil price crash, the fiscal deficit stands at N4.97tn,” he stated.
He said with the new borrowings under the COVID-19 environment, total public debt would further increase beyond the N27.4tn recorded as at December 30, 2019, adding that while the fiscal authority was doing its best to stimulate the economy, it was currently being constrained with various economic shocks since 2015.
On what could be done to reposition the economy, he said, “Going forward, two lessons must be learnt in relation to good economic management. The first is the need to take diversification of the economy very seriously and the second is the imperativeness of building fiscal buffers.
“An economy that is diversified in the spheres of production, domestic revenue generation and export earnings is better equipped to withstand internal and external shock.”