Recently, the Central Bank of Nigeria (CBN) published its economic report for Q4-19. According to the report, total actual retained revenue in 2019 once again underperformed the budgeted estimates.
Cumulatively, the actual gross retained revenue in 2019 came to a total of N4.8tn, translating to 56.3% of the annualized monthly budgeted estimate by the CBN. Meanwhile, the gap between actual gross expenditure (N9.4tn) and annualized monthly budgeted expenditure (N10.4tn) was relatively lower (N1.0tn), with at N2.0tn, Recurrent Expenditure at whopping N6.9tn and Statutory transfer at N0.5tn. In all, the overall fiscal deficit settled at N4.6tn. Notably, these numbers account for budgetary spending for a part of both the 2018 and 2019 financial year due to late passage.
In 2020, we expect some improvement in the realities above. First, the early passage of the 2020 Budget, returning fiscal policy to a January to December cycle, will boost the implementation of CAPEX. Also, the changes proposed by the Finance Act will support government revenue. Lastly, while the revenue reforms will require some fine-tuning, we are of the view that it will go a long way to support the implementation of the minimum wage, especially by sub-national governments, who are the biggest beneficiaries of the 50% VAT increase.
United Capital Plc Research
