Nigeria’s public debt, which has increased significantly over the past seven years, reaching a mammoth height of N61 trillion, is increasingly eclipsing the nation’s revenue generation.
According to the 2022 fiscal performance report released on Thursday, the cost of servicing debt surpassed the federal government’s retained revenue by N310 billion in the first four months of 2022, which means, the government borrowed to pay debt.
The report said debt servicing gulped N1.9 trillion in the first four months of the year, whereas the government generated a total of N1.6 trillion during that period.
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Though the development sends a rattling signal, analysts say it was long expected considering that Nigeria has been borrowing mainly for consumption.
Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, said in Abuja, while addressing the situation, that urgent action is needed to address revenue underperformance and expenditure efficiency at national and sub-national levels.
The report indicated that there is an alarming gap between revenue generated by the government and debt servicing, and it will require drastic measures to upset it.
“The aggregate expenditure for 2022 is estimated at N17.32 trillion, with a pro-rata 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 pro-rata target of N3.32 trillion.”
The report noted that the federal government’s performance, based on its N285.38 billion oil revenue for the referenced period, amounts only to 39%, although it generated a total of N632.56 billion, which amounts to 84%, from non-oil tax revenue.
“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.”
Against this backdrop, there is growing concern that the revenue challenge will deteriorate at the end of the Q3, as oil revenue decreases further due to insufficient oil output and petroleum subsidy payments.
The federal government is yet to find a way to address the debt – revenue disparity as its previous attempts to remove the subsidy were fiercely resisted because of concern that it will compound the already bad economic situation of the people.
The government plans to borrow additional N4 trillion to fill the budget deficit emanating from subsidy payments.
Very scary. I will pray for all Nigerians.