Nigeria’s rising debt profile emerged as a cause for concern again following recent worrying figures released by the Federal Government.
According to FG, the cost of servicing debt surpassed the federal government’s retained revenue by N310 billion in the first four months of 2022.
These worrying figures were released by the FG in its 2022 fiscal performance report for four months released on Thursday.
According to the report, the federal government’s total revenue for the period was N1.63 trillion, while debt service gulped N1.94 trillion.
While giving updates on the budget performance in Abuja, Zainab Ahmed, minister of finance, budget and national planning, said urgent action is urgently required to address revenue underperformance and expenditure efficiency at national and sub-national levels.
“The aggregate expenditure for 2022 is estimated at N17.32 trillion, with a prorata spending target of N5.77 at end of April,” the report reads.
“The actual spending as of April 31st (sic) was N4.72 trillion. Of this amount, N1.94 trillion was for debt service, and N1.26 trillion was for personnel costs, including pensions.
“As of April, N773.63 billion has been spent on capital expenditure.
“As of April 2022, FGN’s retained revenue was only N1.63 trillion, 49 percent of the prorata target of N3.32 trillion.”
The document added that the federal government’s share of oil revenues was N285.38 billion (representing 39 percent performance), while non-oil tax revenues totalled N632.56 billion — a performance of 84 percent.
Based on the figures, the government generated N401.8 billion from company income tax (CIT) and value-added tax (VAT).
“CIT and VAT collections were N298.83 billion and N102.97 billion, representing 99 percent and 98 percent of their respective targets,” the report added.
“Customs collections (made up of import duties, excise and fees, as well as federation account special levies) trailed target by N76.77 billion (25.42 percent).
“Other revenues amounted to N664.64 billion, of which independent revenue was N394.09 billion.”
As if that was not enough, the Federal Government recorded a N3.09 trillion deficit in its 2022 budget implementation between the four months under review.
This is even as it emerges that subsidy is set to gulp a whopping N6.72 trillion in 2023.
According to Ahmed, the deficit underscored the fiscal challenges confronting the Federal Government.
The Minister also announced that the Nigerian National Petroleum Company Ltd., which had funded the fuel subsidy until last month, would henceforth leave that responsibility to the federation.
This she said would even create a greater strain on the fiscal position of the federal government, describing fuel subsidy as unsustainable.
On the subsidy, Ahmed stated that the government had projected fiscal outcomes in the medium term under two scenarios based on the underlying budget parameters/assumptions.
Under the first scenario, the Minister said “The subsidy on PMS is estimated at N6.72 trillion for the full year 2023.
“It will remain and be fully provided for by the NNPC on behalf of the federation.”
The second, she said, is that “petrol subsidy will remain up to mid-2023 based on the 18-month extension announced early 2021, in which case only N3.36 trillion will be provided for.
“Both scenarios have implications for net accretion to the Federation Account and projected deficit levels.
“There will be tighter enforcement of the performance management framework for Government Owned Enterprises (GOEs) that will significantly increase operating surplus/dividend remittances in 2023.”
This worrying signal follows a World Bank Group report that public debt in Nigeria and other low- and middle-income countries is now at a 50-year high, which is equivalent to more than 200 per cent of government revenues.
In a new report titled, “Raising the Bar on Debt Transparency,” the Washington-based bank said with the pandemic-induced economic slowdown, the impact of the war in Ukraine and the rise of interest rates, many countries were facing severe challenges in servicing their debts.
The report read in part, “Total public debt stands at an alarming 50-year high in low- and middle-income economies, the equivalent of more than 200 per cent of government revenues.”
According to the World Bank’s recent International Debt Statistics 2022 report, as a result of COVID-19, the external debt burden of the world’s low-income countries rose by 12 per cent to a record $860 billion in 2020 —the fastest accumulation since World War II.
According to the report, despite the unprecedented debt burden many governments were facing, the true extent of their public debt liabilities was often hard to quantify. In fact, many low- and middle-income countries would not disclose timely debt data or at times published incomplete data that understated the true level of liabilities, the report further said.
