FEDERAL Government gross federation account earnings dropped by 35.22 per cent to N1.94 trillion below the 2025  budget benchmark of N3 trillion, the Central Bank of Nigeria (CBN) revealed in its latest report.

The shortfall in earnings is expected to affect the remittances of projected revenues targeted in the 2025 budget, as the apex bank report disclosed that the revenue dropped from N2.83 trillion in December 2024 to N1.94 trillion in January 2025.

The gross federation account in Nigeria is a central account into which all revenues collected by the Federal Government are deposited, excluding those classified as Federal Government independent revenue.

The apex bank revealed this in its Economic Report, released recently by the CBN.

It shows that the decline reflected lower receipts from oil and non-oil sources.

“The provisional gross federation account receipt was 31.35 per cent and 35.22 per cent below the level in the preceding month and the benchmark, respectively.

“The decline was largely due to a reduction in receipts from petroleum profit tax (PPT), royalties, company income tax, and customs & excise duties,” CBN said.

A cursory look at the report shows that the composition of gross federation revenue for non-oil revenue remained dominant, accounting for 68.67 per cent of the N1.94 trillion, while oil revenue constituted the balance.

“Non-oil revenue, at ₦1.33 trillion, was 22.18 per cent below the level in the preceding month, driven by low collections from federal government independent revenue, customs & excise duties and corporate tax,” CBN stated.

However, the non-oil revenue was 8.25 per cent above the monthly target of N1.23 trillion.

Oil revenue also declined by 45.45 per cent to N610 trillion from the level in December 2024, due to lower receipts from petroleum profit tax (PPT) and royalties.

It was 65.55 per cent short of the monthly target due largely to shut-ins arising from ageing oil pipelines and installations.

The apex bank explained that from the federally collected revenue of N1.94 trillion, a net balance of N1.42 trillion was distributed to the three tiers of government after accounting for additional revenue and statutory deductions, and transfers.

The federal, state, and local governments received N450 billion, N500 billion, and N360 billion, respectively, while the balance of N110 billion was allocated to the 13 per cent derivation fund for oil-producing states.

“Net disbursement was 17.52 per cent below the level in the preceding month and 38.30 per cent short of the monthly target,” CBN added.

The ICIR has, in a recent report, analysed why the federal government might face a setback in the implementation of its 2025 budget provisions with the consistent drop in crude oil price, hitting its lowest level at $65 per barrel in four years early this month.

This indicates worries as Nigeria relies largely on the proceeds from oil revenue to fund a large chunk of its national budget.

The government had set a $75 per barrel benchmark for the oil price; dropping below this figure could cause possible upset, while increasing the chances of further borrowing by the government.

This year, it projected a budget size of N54.99 trillion, setting its crude oil price benchmark at $75 per barrel, oil production at 2.06 million barrels per day (bpd), and exchange rate at N1,500 per dollar.