Monetary Policy

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The Conduct of Fiscal Policy

Fiscal Policy 2003
The main fiscal policy thrusts of the 2003 Federal Government budget were to pursue a growth strategy that would achieve fiscal stability; improve non-oil sector competitiveness; reduce inflation; maintain a fiscal deficit of not more than 2.5% of GDP; deepen and broaden fiscal incentives to further encourage industrial and manufacturing sector; attract foreign investment; highlight tariff reform and liberalization in line with regional incentives; achieve stable and competitive exchange rate; focus on external debt management approach that would lead to reduction in aggregate debt levels and debt service costs in the context of the medium term economic program; convert the N1.5 trillion domestic debt into long term bonds to ease pressures from annual debt service on capital development and continue the structural reforms for improved tax and customs administration. These goals were to be achieved through the diversification of the productive base of the economy, concentration of public sector investment in a few priority sectors where production would be supported and welfare of the people optimized.

In order to achieve the above goals, the gross revenue budgeted by the Federal Government for 2003 was N685.4 billion and expenditure of N765.1 billion. Recurrent expenditure was N508.8 billion while the capital outlay was N256.4 billion. However, the total government revenue during 2003 was N2, 575.1 billion, made up of N2, 074.3 billion from oil and N500.8 billion non-oil sources, respectively. Federation account revenue totaled N2, 011.6 billion, while Federation account revenue for sharing was N1821.0 billion. Federal Government Retained Revenue for the year was N1, 023.2 billion. Actual government expenditure was N1, 226 billion, made up of N984.4 billion recurrent and N241.7 billion capital expenditures, respectively. The fiscal operations of the Federal Government resulted in a current account surplus of N39 billion and an overall deficit of N202.7 billion, which was financed mainly from the domestic banking system. The deficit of N202.7 billion was 2.05% of the GDP.