Federal Government
President Muhammadu Buhari

Slack revenue: FG records N1.14 trillion deficits in Q4 2019

The Central Bank of Nigeria (CBN) has revealed  that Federal Government’s total expenditure was more than total receipts by about N1.4 trillion in the fourth quarter (Q4) of 2019 due to slack revenues.

CBN revealed this in its fourth quarter of 2019 economic report.

The apex bank stated that provisional Federal Government retained revenue in the review quarter was N938.72 billion, while total estimated expenditure amounted to N2.074 trillion, resulting in an estimated deficit of N1.136 trillion.

In addition, the report highlighted that non-oil revenue for the period dropped when compare with equivalent period in 2018.

Then, the apex bank explained that it maintained the monetary policy rate at 13.50 per cent.

It also held that average term deposits, and prime lending rates receded, the move that analysts attribute to the adjustment made in the CBN’s Open Market Operations.

“On quarter-on-quarter basis, broad money supply (M3) grew by 4.1 per cent to N36, 478.13 billion at the end-November 2019, compared with 0.4 per cent and 8.1 per cent increase at the end of third quarter 2019 and fourth quarter of 2018, respectively”, the CBN held.

Read also: https://dmarketforces.com/2019-budget-implementation-cbn-raises-%e2%82%a68-5-trillion-overdraft-for-fg/

The apex bank remarked that the development reflected, wholly the 2 per cent increase in net foreign assets, which more than offset the 1.2 and 10.6 per cent decline in net domestic credit and other assets (net) of the banking system, respectively.

However, over the level at the end of December 2018, broad money supply (M3) grew by 9.3 per cent at the end of November 2019, compared with the growth of 5.1 and 16.4 per cent at end of third quarter 2019 and fourth quarter of 2018, respectively.

It said the growth in M3 reflected, wholly, the 28.8 per cent increase in domestic credit (net), which more than offset the 22.8 per cent and 4.9 per cent decline in net foreign assets and other assets (net) of the banking system, respectively.

“But narrow money supply (M1) fell by 1.7 per cent to N10, 930.57 billion at end-November 2019, compared with the decline of 0.4 per cent at the end of third quarter 2019”, the report reads.

CBN remarked that developments in banks’ deposit rates were mixed, while lending rates trended downwards in the fourth quarter of 2019.

The report revealed that with the exception of the average savings and 7 days deposit rates, which rose from 3.69 per cent and 3.23 per cent to 3.93 per cent and 3.30 per cent, respectively.

All other deposit rates of various maturities, fell from a range of 8.23 – 10.29 per cent in September 2019 to a range of 7.93 – 9.92 per cent in December 2019.

“The average term deposit rate fell by 0.29 percentage point to 8.07 per cent at the end of the review quarter”, CBN noted.

The report stated that the weighted average prime lending and maximum lending rates fell by 0.35 percentage point and 1.2 percentage point to 14.99 per cent and 29.98 per cent at end-December 2019.

Consequently, the spread between the weighted average term deposit and maximum lending rates narrowed by 0.91 percentage point to 21.91 percentage points at the end of the review quarter.

CBN said margin between the average savings and maximum lending rates narrowed by 1.44 percentage point to 26.05 percentage points at end December 2019.

According to the apex bank, the total value of money market assets outstanding in the fourth quarter of 2019 stood at N12.76 billion.

This shows an increase of 2.6 per cent, compared with the increase of 2.9 per cent at the end of the third quarter of 2019.

It said the development was attributed, largely, to the 3.1 per cent increase in FGN Bonds outstanding during the review quarter.

Developments on the Nigerian Stock Exchange (NSE) were bearish, CBN remarked.

The CBN said in the report that federally collected revenue in the fourth quarter of 2019 fell below both the provisional quarterly budget and receipts in the preceding quarter by 30.8 and 10.6 per cent, respectively.

“The development, was due, largely, to the shortfalls in receipts from both oil and non-oil revenue components in the review quarter”, CBN added.

The apex bank however stated that agricultural activities in the review quarter were dominated by the harvest of cash and root crops.

It said in the livestock sub-sector farmers engaged in the fattening of cattle and stocking of poultry in anticipation of the end of the year sales.

The period headline inflation, on year-on-year basis for the fourth quarter of 2019, stood at 11.98 per cent.

Meanwhile, foreign exchange inflow, through the CBN, rose by 6.1 per cent, while outflow fell by 3.9 per cent, relative to their levels in the third quarter of 2019.

The economic report stated that total non-oil export proceeds received by banks fell by 37.8 per cent, compared with the level at the end of third quarter 2019.

The average naira exchange rate vis-àvis the US dollar depreciated at the inter-bank, BDC segment, and the Investors & Exporters  Window.

“The average exchange rate at the ’Investors’ and ‘Exporters’ window, the BDC and the Inter-bank segments of the market were N362.83/US$, N359.42/US$ and N306.95/US$, respectively, in the review quarter.

“At US$38.07 billion, the gross external reserves fell by 6.4 per cent, compared with the level at end of third quarter 2019”, CBN said in the report.

Stretching further, CBN said World crude oil demand and supply were estimated at 100.95 million barrels per day (mbd) and 99.32 mbd, respectively, in the fourth quarter of 2019, compared with 100.63 mbd and 99.26 mbd demanded and supplied in the third quarter of 2019.

It said Nigeria’s crude oil production, including condensates and natural gas liquids, was estimated at an average of 1.92 mbd in the review quarter, compared with 1.91 mbd in the preceding quarter.

But a marginal decline was recorded in the average price of oil in the period.

CBN’s report revealed that the average price of Nigeria’s reference crude, the Bonny Light (370 API), was US$64.87 per barrel in the fourth quarter of 2019.

This represents a marginal drop when compared with US$64.25 per barrel in the third quarter of 2019.

“Movement in oil prices were driven, mainly, by optimism of a trade agreement between the US and China, as well as the improved outlook for global oil demand amid better-than expected economic performance of some major economies in the review period”, the CBN noted.

Slack revenue: FG records N1.14 trillion deficits in Q4 2019