Nigeria's first quarter of the year saw a total of ₦799.10 billion in crude oil sales, according to information released by the Central Bank of Nigeria (CBN) yesterday (Q1 2022).
This marked a 28.3% decrease from the ₦1.12 trillion realised in Q4 2021 and was significantly less than the projected period-high of ₦2.38 trillion in oil income.
The CBN Economic Report, First Quarter 2022, which was downloaded from the regulator's website, contained this information.
The bank added that the short-term budgetary outlook remained less hopeful as government revenue continued to be negatively impacted by the cost of gasoline subsidies and weaker than anticipated crude oil production.
Amidst the current fiscal constraints, the report also noted that debt service obligations in Q1 gulped ₦897.17 billion compared to ₦428.60 billion in Q4, due largely to the principal repayments and redemption of matured debt obligations.
Nonetheless, non-oil revenues increased to ₦1.73 trillion compared to ₦1.48 trillion in the preceding quarter but fell short of the ₦2.22 trillion target for Q1.
According to the apex bank, federally-collected revenues declined to ₦1.67 trillion in the review period, compared to ₦1.93 trillion in Q4 and also fell below the ₦3.55 trillion projection.
However, the government’s retained revenue for the period was boosted by the significant increase in receipts from Value-Added Tax (VAT) and FGN Independent Revenue.
The retained revenue valued at ₦1.14 trillion exceeded receipts in the preceding quarter by 12.6 per cent.
The report however noted that the longstanding revenue challenge was evident as the outcome in the quarter was 57.6 per cent short of projection in the prorated quarterly budget.
The CBN added that “The effect of revenue increase outweighed the decline in aggregate expenditure, inducing a contraction in fiscal deficit, relative to the preceding quarter. At ₦1,617.84 billion, the provisional fiscal deficit of the FGN was 11.8 per cent below the level in the preceding quarter, but overshot the quarterly target of ₦1,596.52 billion by 1.3 per cent.”
The apex bank further stated that the Russia-Ukraine conflict that disrupted global economic activities led to a surge in international crude oil prices and helped improve Nigeria’s trade balance.
The report added that as a result, the current account recorded an impressive surplus of $2.58 billion, compared to $0.05 billion in the preceding quarter, attributed largely to improved export earnings.
However, the financial account posted a lower net acquisition of financial assets of $0.78 billion (0.7 per cent of GDP), compared to $5.15 billion (4.3 per cent of GDP) in Q1 2021, reflecting higher incurrence of financial liabilities.
The central bank also stressed that in all, the Nigerian financial sector remained stable, as the key financial soundness indicators were within regulatory thresholds, while activities on the Nigerian Exchange Limited (NGX) sustained a bullish run, on the back of portfolio switching from fixed-income investments to equities and eased financial conditions.
The CBN further pointed out that the federal government’s share of total public debt remained within sustainable thresholds at ₦35.10 trillion, representing 19.9 per cent of GDP as at end of March 2022.
The report added, “On the outlook, the performance of the global economy is expected to slow significantly in 2022, a consequence of shocks induced by the Russia-Ukraine conflict, amidst elevated global inflation.
“On the domestic front, the economy is expected to sustain its positive growth trajectory in the near term, while inflation aligns with the global trend. The fiscal outlook for the near term is less optimistic, as government revenue remains impaired by PMS subsidy burden and lower-than-expected crude oil production.”
It, however, added that the outlook of the external sector remained moderately optimistic due to the prospect of higher external reserves, arising from favourable crude oil prices.
Continuing, the report stated, “Though public borrowing was in tandem with the Medium-Term Debt Strategy (2020-2023) of the FGN, debt levels remained elevated in the review period. At ₦41,604.06 billion at end-March 2022, the total public debt outstanding rose by 5.2 per cent relative to the level at end-December 2021.
“Domestic debt accounted for 60.1 per cent of total debt, while external debt obligations constituted 39.9 per cent. Of the total public debt outstanding, FGN (including State governments’ external debt, which forms part of the FGN’s contingent liability) accounted for ₦36,761.22 billion, while the state government’s Domestic debt stock accounted for the balance of ₦4,842.84 billion.
“Further analysis shows that FGN domestic debt stood at ₦20,144.03 billion. FGN bond issues maintained its dominance, accounting for 70.7 per cent of the total domestic debt, followed by Treasury Bills (21.9 per cent), Promissory Notes (3.8 per cent), FGN Sukuk (3.0 per cent), and others1 (0.6 per cent).
“Regarding holders of Nigeria’s external debt, which stood at ₦16,617.19 billion, multilateral, commercial and bilateral loans accounted for 47.4 per cent, 39.8 per cent and 11.3 per cent, respectively, while ‘other’ loans constituted 1.5 per cent.”