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The federal government revealed on Wednesday that it spent 4.2 billion naira on debt service between January and November 2021.
This represents 76.2 percent of the 5.51 billion naira revenue generated during the period under review.
Finance, Budget and National Planning Minister Zainab Ahmed revealed this in Abuja during the public presentation of the details of the 2022 Appropriations Bill, signed by the President, Major General Muhammadu Buhari (at retirement) on December 31, 2021.
The presentation, which included an overview of the 2021 budget execution, found that oil revenues contributed to N970.3 billion in total revenue generated during the period, while non-oil taxes contributed to 1.6 billion naira. Other income amounted to 2.8 billion naira.
Ahmed said: “In November 2021, aggregate income was 5.51 billion naira, which is 74% of the target. Of this, the share of oil revenue was N970.3 billion, which is 53% of the performance of the prorated sum in the 2021 budget while the share of non-oil tax revenue was 1.62 billion. naira, or about 118.8% above target.
“Corporate income tax and value added tax collections were N718.58 billion and N360.56 billion, or 115% and 165%, respectively, of the prorated targets. for the period. Customs collections amounted to N 542.11 billion, or 104 percent of the target.
“Other income amounted to 2.80 billion naira, of which independent income was 1.10 billion naira and retained income from state-owned enterprises was 1.20 billion naira.”
On expenditure, the Minister noted that the government spent N12.56tn on the budget pro rata N13.57tn, during the review period.
She added that the performance included estimates of GOE spending but excluded project-related loans.
Total expenditure represents 4.20 billion naira on debt service, 3.02 billion naira in personnel costs including pensions, and 3.2 billion naira spent on investment projects.
She stressed, however, that the figures for 2021 were provisional and, as such, subject to updates and reconciliations.
Meanwhile, Ahmed also said the government ran a budget deficit of 7.1 billion naira between January and November 2021.
She revealed that the total revenue generated by the government during the 11-month period was 5.51 billion naira while the expenditure amounted to 12.56 billion naira.
This resulted in a budget deficit of 7.1 billion naira, which is 1.14 billion naira higher than the prorated budget of 5.9 billion naira for the period under review.
She also revealed items used by the federal government to fund the 2021 budget, including multilateral and bilateral loans valued at N369.93 billion and new borrowing of N668 billion.
Ahmed said the N6.68tn was N1.65tn higher than the N5.05tn allocated to new loans in the 2021 budget.
While defending government borrowing and the country’s debt level, the minister insisted that the country had an income problem and not a debt problem, adding that the debt level remained within limits. sustainable.
She said: “This is to reaffirm that the federal government debt level is still within sustainable limits. Borrowing is primarily intended for capital expenditure and human development, as specified in section 41 (1) a of the 2007 Fiscal Responsibility Act.
“After witnessing two economic recessions, we had to spend to get out of the recession, which contributed significantly to the growth of public debt.
“It is unlikely that our recovery from each of the two recessions would have been so rapid without the sustained public spending financed in part by debt.
“To make matters worse, the country is technically at war with the pervasive security concerns across the country.
“This required massive expenditure on equipment and security operations, contributing to the budget deficit; the defense and security sector represents 22% of the 2023 budget.
It revealed that Nigeria’s budget deficit to gross domestic product stood at -4.3%, while the debt-to-GDP ratio stood at 30% in November 2021, one of the lowest in Africa.
Conversely, Nigeria’s debt service-to-income ratio rose to 76 percent in November 2021, the highest among Africa’s major economies, she said.
“This is proof that what we have is not a classic debt sustainability problem, but an income challenge,” she added.
However, experts on Wednesday criticized the government for the high debt service-to-income ratio, which made borrowing costly for the country.
SD&D Capital Management Managing Director Idakolo Gbolade said: “The Minister is just trying to cover up the Nigeria problem. I am very happy that she recognizes that we have a revenue problem.
“The issue of not having a debt problem can be established because they use the debt / GDP benchmark. But our debt-to-income service is abysmal. “
According to him, the borrowing rate is unsustainable and the government must make the necessary adjustments before the country finds itself in a serious debt problem.
“Our loan is not sustainable. If we do not increase our income, we will get to a point where we will use all of our payable income to pay down debt. Nigeria is heading towards this if something does not happen urgently.
“What we need to do is cut our fabric to fit our coat. We need to reduce borrowing and ensure that we fund essential projects. If we don’t, we are going to run into a serious problem in the future. ”
The World Bank had said Nigeria’s debt was vulnerable and expensive.
He added that the country’s debt risked becoming unsustainable in the event of macro-fiscal shocks.
However, the president, Major General Muhammadu Buhari (retired), stressed that the country takes loans according to need, adding that the loans are necessary to boost infrastructure development in the country.
He said this during an interview with Channels Television on Wednesday.
He said, “Well, we take loans where it’s needed. You know what was between Lagos and Ibadan only, not to mention the rest of the country. We had the Chinese to help us on the rails and the roads. How do we tie this up? If we have linked this now, maybe between Lagos and Ibadan now, we have to walk. So, Chinese are welcome. Anyone willing to come and help us with our infrastructure (roads, rail and electricity) will be welcome.
“We’ve had success and people have to measure success against the problems when we started. We need to build infrastructure and we have identified the infrastructure we need. We have to make the railroads work. We have to make the roads.
President added that Nigerians need to appreciate what his regime has done
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