Nigeria’s Revenue Falls below N1.94trn Debt Costs in Jan-April

Nigeria’s Revenue Falls below N1.94trn Debt Costs in Jan-April

Nigeria failed to generate enough revenue to meet government obligations up till April, signalling uncertainties in the nation’s macroeconomics condition. In the first four months in the year, Nigerian government retain revenue totalled N1.63 trillion.

This amount was below N1.94 trillion expended to service the nation’s debt stock, according to Budget Office’s Medium Term Expenditure Framework & Fiscal Strategy Paper.

Total public debt has accelerated to #40 trillion, the sum which exclude ways and means funding window provided by the central bank to government. The amount CBN gives to Federal government via ways and means window nears #18 trillion, according to analysts.

When securitize, total public debt would be nearing #60 trillion in 2022, from less than #12 trillion in 2015. The fiscal strategy paper indicates that Federal government revenue was 49% below N3.32 trillion that the nation planned to generate as per budget 2022 estimate. 

However, due to fiscal slippage following decline earnings from oil exports, Nigerian government was conservative with spending, but only by cutting capital projects. Fiscal document released by budget office shows that aggregate spending was moderate in the first four months below prorated amount provided by 2022 budget.

The nation’s spending plan for 2022 was pegged at N17.32 trillion. However, government expended N4.72 trillion of the budget provision between January and April. This was below the pro-rata expenditure of N5.77 trillion allowed by the approved spending plan.

Looking at the revenue components, it was discovered that FG’s share of oil revenues was N285.38 billion, representing a 39% performance score. Non-oil revenue totalled N632.56 billion translated to 84% of expectation in the period.

Tax income was in a better position with near 100 per cent performance. Corporate income tax and value-added tax collection in the period settled at N298.83 billion and N102.97 billion respectively, according to the document reviewed by MarketForces Africa analysts.

Nigerian custom revenue which included import duties, excise and fees and federal account special levies trailed the target as total collection printed at N76.77 billion, 34% of the government expectation.

Other revenue sources available to the Nigerian government produce N664.64 billion between January and April 2022. Out of the sum, independent revenue contributed N394.09 billion. READ: T-Bills Yield Falls 2 Basis Points as Naira Holds Position

As of April, debt service payments accounted for the largest chunk of Federal Government spending, followed by N1.26 trillion in personnel costs including pension payments. Total capital spending during the period was N773.63 billion, according to the document.

Nigeria’s government revenue amounts to only 7.5% of its gross domestic product, among the lowest in the world, according to the International Monetary Fund. In sub-Saharan peers like South Africa, it is above 20%.

Total public debt stood at about N40 trillion at the end of 2021, giving a debt-to-gross domestic product ratio of 22.47%, still within the 40% limit set by the government.

Central Bank of Nigeria Governor Godwin Emefiele earlier this week expressed concern over the sustainability of the country’s debt and urged the government to urgently diversify its revenue sources. #Nigeria’s Revenue Falls below N1.94trn Debt Costs in Jan-April