By Chinwendu Obienyi
The Federal Government of Nigeria (FGN) recorded a significant decline in expenditure and revenue in January 2025, as fresh data from the Central Bank of Nigeria (CBN) revealed a deepening fiscal deficit and falling receipts from both oil and non-oil sources.
According to provisional figures from the apex bank’s economic report for January 2025, the aggregate expenditure of the federal government stood at N1.62 trillion, representing a 15.51 per cent decline from the previous month and falling 32.56 per cent short of the projected N2.40 trillion.
The shortfall, the apex bank said, was largely attributed to delays in capital releases and lower recurrent spending.
Recurrent expenditure accounted for 91.02 per cent of total spending, while transfer payments made up the remaining 8.98 per cent.
Meanwhile, the overall fiscal deficit expanded in the period under review. Analysts link this to a marked drop in Federal Government Independent Revenue and a reduction in exchange gains, both of which weighed heavily on the fiscal balance. Gross revenue into the Federation Account also declined sharply. At N1.94 trillion, receipts were 31.35 per cent lower than in December 2024 and 35.22 per cent below the benchmark. The slump was driven by reduced inflows from the Petroleum Profit Tax (PPT), royalties, Company Income Tax, and customs and excise duties.
Despite the dip, non-oil revenue remained dominant, accounting for 68.67 per cent of gross earnings. However, non-oil receipts also slid to N1.33 trillion, down 22.18 per cent from the previous month, though 8.25 per cent above the target of N1.23 trillion. This performance was dampened by underperformance in customs duties, corporate tax, and independent revenue streams.
Oil revenue declined more sharply, falling 45.45 per cent month-on-month to N0.61 trillion. It was also 65.55 per cent short of the monthly target, a result of shut-ins from aging oil pipelines and installations, which limited petroleum profit tax and royalty collections.
From the gross federally collected revenue, N1.42 trillion was distributed among the three tiers of government, following deductions and transfers.
The Federal Government received N0.45 trillion states got N0.50 trillion, while local governments took N0.36 trillion. An additional N0.11 trillion was allocated to the 13 per cent Derivation Fund for oil-producing states. This disbursement was 17.52 per cent lower than December’s figure and 38.30 per cent below the monthly target.
On the revenue side, the FGN’s retained revenue fell drastically to N0.48 trillion, down 69.19 per cent from the preceding month and 70.40 per cent below the budgeted target. This drop again reflected the shortfalls in independent revenue and exchange gain receipts.m The figures underscore the growing fiscal pressure on the federal government, amid volatile oil markets, infrastructure constraints, and tax revenue challenges.
Economists warn that unless urgent reforms are undertaken to boost revenue and curb inefficiencies, the government may face increasing difficulties in meeting its spending obligations in the months ahead.