Daily Insight – Budget implementation: The Cog in the Wheel

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The Central Bank of Nigeria recently released its quarterly economic report by for the third quarter of 2018. The fiscal operations segment of the report highlighted a federal government expenditure of N1.0tn in Q3-18 alone. Cumulatively, the fiscal authority expensed N3.6tn in first 9 months of 2018, – a far cry from the N9.1tn earmarked in the 2018 budget implying a 40% implementation rate so far.

Daily Insight - Budget implementation: The Cog in the Wheel - Brand Spur

Nevertheless, this is unsurprising considering the late passage and assent of the 2018 appropriation bill that extended way into the better half of the year. At the current run rate, it is discernible that 2018 budget implementation may not be fundamentally different from historical practice; 2016 – 72.5% and 2017 – 86.9% respectively.

More so, the recent crude oil price rally to a high of $82.7/b in Q3-18 did not necessarily filter into a huge revenue spike as the revenue generated from oil moderated marginally q/q to N1,394.1bn from N1,398.1bn, consequent on a shortfall in crude production that stemmed from shutdowns at some NNPC terminals. With the recently issued Eurobond expected to cover c.45.5% of the deficit in the 2018 budget, we opine that the late budget passage and poor budget implementation remains a cog in the wheel of the Nigerian fiscal policy.