Emmanuel Ochayi
Nigeria’s debt service to revenue ratio has skyrocketed to 183% during the first quarter of 2023, as disclosed by the Budget Office. This development points to the nation’s financial woes, triggering concerns about fiscal sustainability.
The data unveiled within the Budget Office’s first-quarter budget implementation report for 2023, underscores the disparity between the budgeted revenue and actual income.
Join our WhatsApp ChannelWhile the government had allocated N2.16 trillion in revenue, the actual income stood at N1.21 trillion, a contrast to the N1.48 trillion generated during the same period in 2022.
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Nigeria’s fiscal troubles are far from new, as it has grappled with acute fiscal shortfalls since the ruling APC government assumed power. In 2022, the total debt service reached an eye-popping N5.65 trillion, amounting to 97.4% of the budgeted revenue.
During the same year, total revenue plummeted to N5.8 trillion from N6.7 trillion in 2021, leaving the government with a fiscal deficit of N7.5 trillion, equivalent to 129% of actual revenue collected.
As 2023 unfolds, the trend of missing revenue targets while surpassing expenditure thresholds persists. The government’s total expenditure, excluding government-owned enterprises, reached N3.4 trillion, surpassing the budgeted N3.3 trillion.
Yet, recurrent non-debt expenditure was a mere N1.2 trillion, falling short of the N1.63 trillion budgeted. The primary factor exacerbating the growing fiscal deficits remains the escalating debt service obligations.
A closer look at the numbers reveals that total debt service rose to N1.3 trillion, edging past the budgeted N1.2 trillion. Meanwhile, the Ways and Means overdraft lent to the government by the central bank reported a debt service of N912 billion, a substantial departure from the budgeted N300 billion.
Capital expenditure lagged significantly at N175 billion, a stark contrast to the targeted N841 billion.
In terms of financing activities, the government’s performance was lackluster, garnering only N2 trillion from domestic debts versus the budgeted N2.695 trillion.
As a result, the government concludes the first quarter of the year with a net deficit of N2.3 trillion, excluding government-owned enterprises’ budgets and project-tied loans.
In the face of this financial scenario, the federal government announced on Monday its proposal for N26 trillion budget for the 2024 fiscal year, compared to the existing N21.8 trillion budget. This proposal raises questions about the government’s strategy to overcome its mounting fiscal challenges and attain economic stability in the coming years.
Emmanuel Ochayi is a journalist. He is a graduate of the University of Lagos, School of first choice and the nations pride. Emmanuel is keen on exploring writing angles in different areas, including Business, climate change, politics, Education, and others.
