Cost of servicing Nigeria's national debt surpasses federal government's retained revenue

NIGERIA'S financial situation has become precarious over the last few months after data just released show that the cost of servicing the national debt has surpassed the federal government’s retained revenue by N310bn ($746.26m) in the first four months of 2022.

According to the federal government's 2022 fiscal performance report for the first four months of 2022 released yesterday, total revenue for the period was N1.63trn, while debt service gulped N1.94trn. While giving updates on the budget performance, finance minister Zainab Ahmed, said urgent action is required to address revenue under-performance and expenditure efficiency at national and sub-national levels.

“The aggregate expenditure for 2022 is estimated at N17.32trn, with a pro-rata spending target of N5.77trn at end of April. The actual spending as of April 31st was N4.72trn and of this amount, N1.94trn was for debt servicing and N1.26trn was for personnel costs, including pensions.

“As at April, N773.63bn has been spent on capital expenditure and as of April 2022, the federal government's retained revenue was only N1.63trn, 49% of the pro-rata target of N3.32trn.  Company income tax (Cit) and value added tax (Vat) collections were N298.83bn and N102.97bn, representing 99% and 98% of their respective targets,” the report added.

Also, according to the document, the federal government’s share of oil revenues was N285.38bn, representing 39% performance, while non-oil tax revenues totalled N632.56bn, representing a performance of 84%. Based on these figures, the government generated N401.8bn from Cit and Vat together.

“Customs collections (made up of import duties, excise and fees, as well as federation account special levies) trailed their target by N76.77bn or 25.42%. Other revenues amounted to N664.64bn, of which independent revenue was N394.09bn," the report added.