Nigeria’s whirlwind of revenue misfortune, compounded by COVID-19-induced economic strains and rising debt profile, keeps taking toll on its financial status and increasingly downsizing the country’s budget implementation.
For the first quarter of the year, the federal government of Nigeria recorded a budget deficit of N2. 293 trillion, Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed said in the First Quarter (Q1) Budget Implementation Report (BIR).
The BIR said: “The revenue and expenditure outturn of the Federal Government resulted in a fiscal deficit of N2.293 trillion during the quarter (6.43 percent of the 2021 quarterly GDP).
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“The first quarter deficit was N1.070 trillion (87.51 percent) higher than the projected quarterly fiscal deficit of N1.222 trillion. The 2021 fiscal deficit was also higher than the N1.377 trillion deficit recorded in the first quarter of 2020. The deficit was partly-financed through domestic borrowing of N550.0 billion.”
N1.1 trn revenue
Vanguard highlighted the figures contained in the BIR as follows: The federal government total revenue stood at N1.091 trillion in the period under review.
This comprises N299.33 billion (27.43 percent) oil revenue and N792.09 billion (72.57 percent) non-oil revenue.
The amount received was N905.19 billion (45.34 percent) below the quarterly budget projection but N99.17 billion (9.99 percent) above the N992.25 billion reported in the first quarter of 2020
N3.4 trn expenditure
On the expenditure side, the government spent the sum of at N3.384 trillion, representing N502.29 billion (17.43 percent) and N1.014 trillion (42.80 percent) above the N2.882 trillion quarterly projection and N2.370 trillion reported in the corresponding quarter of 2020, respectively.
A breakdown of the expenditure indicated that a total of N1.096 trillion was spent on non-debt recurrent expenditure in the first quarter of 2021. This represents a decrease of N313.99 billion (22.26 percent) and N50.79 billion (4.43 percent) below the quarterly estimate of N1.410 trillion and N1.147 trillion recorded in the first quarter of 2020 respectively. Statutory Transfers was N124.13 billion during the review period.
A total of N384.52 billion was released and cash backed in the first quarter of 2021 for the implementation of 2021 capital projects and programmes of MDAs.
N813b Debt Service
Total Debt Service in the first quarter of 2021 stood at N813.10 billion, indicating an increase of N32.01 billion (4.10 percent) above the N781.10 billion projected for the quarter.
The sum of N581.27 billion was used for domestic debt servicing, while N231.83 billion was used for external debt service during the period under review.
The amount used for domestic debt servicing was N35.40 billion (6.48 percent) above the projection for the quarter.
Oil production
The BIR showed that average oil production and lifting (including Condensates) in the first quarter of 2021 was 1.72mbpd and 1.51mbpd respectively.
It said, “Oil production was 0.14mbpd (7.53 percent) below the 1.86mbpd benchmark for the 2021 Budget. The volume of oil production in the period was also 0.12mbpd (7.69 percent) above the 1.56m bpd reported in the fourth quarter of 2020 and 0.38mbpd (18.45 percent) below the 2.06mbpd recorded in the first quarter of 2020.”
N3.9b trade deficit
Nigeria’s total merchandise trade in the first quarter of 2021 stood at N9.757 trillion, representing 6.99 percent and 14.13 percent increase when compared to the values recorded in fourth and first quarters of 2020 respectively.
The export component of this trade stood at N2.907 trillion, representing 29.79 percent of the total trade, while import was valued at N6.850 trillion, representing 70.21 percent. The higher level of imports over exports resulted in a trade deficit (in goods) of N3.943 trillion.
Oil accounts for 66.38 % export
The value of crude oil export stood at N1.929 trillion (66.38 percent) of the total export while non–crude oil export accounted for 33.62 percent of the total export recorded in the review period.
Paying off Nigeria’s Public Debt Stock of N33.107 trillion has a price that infrastructural projects captured in annual budgets will have to pay. To cap it, the federal government is still making a move for fresh loan of $5.2 billion. Mrs. Ahmed said that the federal government spent 98% (N1.8 trillion) of the total revenue generated in the first five months of 2021 on debt servicing.
Going by this, a fresh loan will mean that Nigeria will need more revenue than it’s generating to service loans – that will guarantee higher deficit in future budgets.
If our borrowings are purely for capital projects, debt servicing wouldn’t pose much of a problem, because we are simply bring our multiyear meagre spending on capital projects forward, lumping them together to be meaningful. But this is an ideal scenario here, how we spend every kobo we borrow and how the projects are valued would define our future as a people.
We are not generating enough revenue, while our needs and challenges continue to expand, a lot is expected of us.
For the kind of people who could save Nigeria, Plato’s philosopher-king proposition comes to mind, or that of aristocracy by Aristotle, each model will have their proponents or promoters with these three distinct features:
Morally sound individuals who are Intellectually non deficient, with impeccable character. Put simply, Morality, Intellect and Character. These three qualities must be present, having one or two won’t be enough, you must possess the three.
The teachers of the old weren’t rich, but they were contented and had enough to cater for their families, and the society revered them. Anyone who aspires for public service but not willing to live on minimum wage is not fit for purpose. It’s morally and ethically reprehensible having public servants who live well above the average citizens, public money should never be used to finance personal cravings and all manner of aggrandizement.
The first step is to stop recognising anyone who robs the public as a decent creature, never give what is holy to the dogs.
Francis puts it correctly. We need the right kind of people in critical places