Deeper Economic Crisis Imminent As Nigeria Spends More On Debt Servicing Than Revenue 

The Nigerian economy is in crisis and sinking deeper and the only likely immediate option for the country’s economic managers would be to recommend to government to either reduce salaries of civil servants or embark on massive retrenchment so as to ensure continuous existence of the country.

However, some Nigerians have been calling for the reduction in the cost of governance and more transparency with the subsidy regime and possible review to ascertain real consumption level and  the swap arrangements.

With recession also looming due to rising inflation, weak and fragile growth, fast depreciating value of naira, among others, contending also with the rising cost of servicing debt which has surpassed the federal government’s retained revenue by N310 billion in the first four months of 2022, would mean bigger challenges that could ground the fragile economy.

This is the same economy where over N3billion was easily raised within some few days by the political parties from the aspirants that purchased nomination forms.

However, according to the federal government’s 2022 fiscal performance report for four months released on Thursday, total revenue for the period was N1.63 trillion, while debt service gulped N1.94 trillion.

Zainab Ahmed, minister of finance, budget and national planning, while giving update on the budget performance for the period painted a gloomy picture that requires urgent attention.

Specifically, she said 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 at 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.
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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.”