Nigeria spends 1.94 trillion naira on debt service between January and April 2022 and exceeds its income


Recent data released by the Ministry of Finance, Budget and National Planning reveals that Nigeria’s debt service cost exceeded its revenue in the first four months of the year. Notably, debt service gobbled up a sum of 1.94 trillion naira between January and April 2022, against retained income of 1.63 trillion naira.

This is contained in the MTFF/FSP 2023 – 2025 report, presented by the Minister of Finance, Dr. Zainab Shamsuna Ahmed.

According to the report, in April 2022, a sum of 1.63 trillion naira was earned as the federal government withheld revenue, which is 49% of the prorated target of 3.32 trillion naira. This figure is significantly lower than the forecast revenue of N9.97 trillion for the full year.

FGN’s share of oil revenue was N285.38 billion (representing a performance of 39%), while non-oil tax revenue totaled N632.56 billion, representing a performance of 84%. Corporate tax and VAT collections were N298.83 billion and N102.97 billion, representing 99% and 98% of their respective targets.

Meanwhile, a total of 4.72 trillion naira was spent between January and April 2022 by the federal government, out of the planned 17.32 trillion naira for the year. While N1.94 trillion was spent on debt service, N1.26 trillion was spent on personnel costs including pensions. In addition, N773.63 billion was spent on capital expenditure during the period.

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Nigerian government revenue has been constrained in recent times by underperforming oil revenue due to continued decline in production capacity caused by crude oil theft, pipeline vandalism, among other factors.

During the four-month period under review, a sum of N285.38 billion was earned as oil revenue by the Federal Government, representing a shortfall of 60.9% from the pro-rated figure. of N730.12 billion. Despite rising crude oil prices in the first half of the year, Nigeria was unable to increase its oil revenues due to a continued decline in production capacity.

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What they say

According to the Minister, Dr. Zainab Ahmed, the inability to increase crude oil production, as well as subsidy deductions, have posed significant challenges to Nigeria’s revenue generation.

“Crude oil production challenges and NNPC’s PMS subsidy deductions pose a significant threat to the achievement of our revenue growth targets, as evidenced by 2022 performance through April,” she says.

“Revenue generation remains the Federation’s main budgetary constraint. The systemic problem of resource mobilization has been compounded by recent economic downturns. Bold, decisive and urgent action is urgently required to address revenue underperformance and expenditure efficiency at national and subnational levels,” she added.

Past

  • Recall that Nairametrics reported that debt servicing engulfed 96% of Nigeria’s revenue in 2021, which was the worst on record at that time. However, recent figures now show that Nigeria’s revenues are no longer sufficient to fund its debt service obligations, leaving the country exposed to further lending.
  • In 2021, the Nigerian federal government spent a sum of 4.22 trillion naira on debt servicing, up 29.3% from the 3.27 trillion naira spent the previous year, while revenue for the period rose only slightly by 9.3% to N4.39 trillion. .
  • Compared to the previous year, Nigeria’s debt service to revenue ratio increased from 81.1% in 2020 to 96% in the year under review. Meanwhile, Nigeria’s total debt stock rose to $100.07 billion in the first quarter of 2022 from $95.78 billion recorded in the previous quarter. This suggests a further increase in debt service costs, while revenues remain weak.

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