A Beginner’s Guide to CBN’s Ways and Means to the Federal Government of Nigeria

CBN’s financing of the FGN deficits seems to be a structural one and not a one-off event. This is because historical data has shown that the CBN has been financing a huge part of the FGN deficits even when there was no economic downturn. For example, out of the total fiscal deficit of N3.64 trillion in 2018, the CBN financed 52.2%. In 2019, the total fiscal deficit was N4.23 trillion and the CBN financed 78.3% or N3.31 trillion of that amount. There was no downturn during those periods, hence it goes against economic theory for the CBN to be printing money to finance significant proportions of the FGN’s fiscal deficit.

Analysis of Nigeria’s Fiscal Revenue from January to April 2020

₦1.25 trillion was expected to be generated in January and February, however, ₦952.5 billion and ₦845.1 billion was generated respectively implying that only 76% and 68% of expected revenue were achieved.
The month (March) which ushered in the Great Lockdown, saw a steep decline in revenue by 14% to ₦729.64 billion (M-o-M) compared to ₦1.32 trillion expected to be collected showing underperformance of 45% revenue collection. Mild recovery was experienced in April’s revenue to ₦915.28bn against ₦1.32trillion expected, an improved 70% target revenue generated.

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