‘Nigeria’s debt exceeds revenue by N13tn in seven years’ - PUNCH
By Sami Tunji
Nigeria’s total debt in seven years outweighed the revenue generated by the Federal Government by N13.26tn, according to findings by The PUNCH.
The findings were based on data from the Central Bank of Nigeria and the Debt Management Office.
The PUNCH learnt that the Federal Government recorded revenue of N43.06tn between 2016 and 2022 as the country borrowed N56.32tn within the same period.
The debt included borrowing by the Federal Government and states (including the Federal Capital Territory), as well as borrowing from the CBN through the Ways and Means Advances.
As of December 2015, Nigeria’s total public debt was N12.6tn, but this grew by N33.65tn to N46.25tn by December 2022.
Also, the borrowing from the CBN was N856.33bn as of December 2015 but grew by N22.67tn to N23.53tn by December 2022.
The Federal Government earned N3.18tn in 2016, N3.62tn in 2017, N3.88tn in 2018, and N4.69tn in 2019.
Also, the Federal Government made N4.02tn in 2020, N4.4tn in 2021, and N5.06tn in 2022.
The DMO recently stressed the need for Nigeria to boost revenue and manage spending.
Past reports have shown that Nigeria suffers declining revenue despite a widening budget deficit.
The PUNCH recently reported that the total budget deficit under the former president, Muhammadu Buhari, was set to hit N47.43tn, according to an analysis of the Federal Government’s data from the Budget Office of the Federation.
The budget data analysed by The PUNCH cover the actual budget deficits and projections for 2015, 2016, 2017, 2018, 2019, 2020, 2021, 2022, and 2023 fiscal years.
According to data, deficit financing has risen by 370.54 per cent from N2.41tn in 2016 to N11.34tn in 2023.
The PUNCH also reported in January this year that the Federal Government recorded a revenue shortfall of N14.28tn under the administration of the former president, Muhammadu Buhari, according to data from the Budget Office of the Federation.
In the period under review, the Federal Government projected N43.05tn as revenue to fund its budget but made only N28.77tn (66.83 per cent of expected revenue).
The revenue shortfalls echoed concerns by the former Minister of Finance, Budget, and National Planning, Zainab Ahmed, over the government’s inability to generate adequate revenue. Nigeria relies on oil for the majority of its revenue, and in recent times, this revenue source has been impacted by low production and subsidy payment.
Recently, while speaking about the implementation of the 2022 budget, Ahmed said, “The full implementation of the 2022 budget is challenged particularly by oil revenues that are falling target at 27.1 per cent as of August.
“Crude oil production challenges and PMS subsidy deductions by the NNPC constitute a significant threat to the achievement of our revenue growth target as seen in the oil and gas performance 2022 as of August.”
“Revenue generation remains the major fiscal constraint of the federation. The systemic resource mobilisation problem has been compounded by recent economic recessions we have witnessed, one during the first term of this administration in 2016, and the most recent one in 2020. But the effort has mainly focused on improving tax administration and collection.”
The rising shortfall has led to an increase in the nation’s debt profile and made the Federal Government consistently rely on the CBN through Ways and Means Advances to fund its deficits.
The PUNCH reported that the Federal Government borrowed N6.07tn from the CBN through Ways and Means Advances in 2022. This pushed the Federal Government’s borrowing from the CBN from N17.46tn in December 2021 to N23.53tn in December 2022.
Raising concerns over this, the World Bank, in its December 2022 update, said, “Moreover, financing of the fiscal deficit through Ways and Means continues to fuel inflation by increasing liquidity in the money market.
“The CBN’s inflation target of six–nine per cent, which has not been achieved since 2016, remains unlikely to be met in the near term.”
An economist and former Vice-Chancellor of the University of Uyo, Prof Akpan Ekpo, earlier said it was dangerous for the country to hope to fund the budget through borrowing.
Ekpo said, “The debts keep increasing and the amount of money used to service debts is also quite high. I can recollect that about 70 per cent or so is being used in servicing debts for 2022. That is worrisome. If the government keeps borrowing to fund recurrent expenditure, it is not good for the economy. It will retard growth.”