Debt servicing cost rises to N2.9tn, gulps 74% of revenue —FG

The Federal Government has said that it spent N2.89 trillion on debt servicing between January and August, 2021.

The Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, disclosed this during the public presentation and breakdown of the highlights of the 2022 appropriation bill held in Abuja on Friday.

According to her, in the first seven months of the year, total expenditure made by the government stood at N8.14 trillion out of which N2.88 trillion was utilised for debt servicing, N2.75 trillion was spent on overhead cost, while N1.75tn was expended on capital projects.

On revenue, she said that the government generated a total of N3.9 trillion comprising, Company income tax of N547.5 billion; Value added Tax collections of N235.7 billion, customs collections of N338.6 billion and other revenues which amounted to N1.7 trillion.

With a debt servicing cost of N2.89 trillion and total revenue of N3.9 trillion, the federal government spent about N74 per cent of its revenue on debt servicing within the review period.

Zainab said, “For the 2021 performance, between January and August, revenue generated was N3.93 trillion which was 73 per cent of the prorated target. Out of this amount, CIT and VAT collections were N547.5 billion and N235.7 billion respectively representing 121 per cent in the case of CIT and 148 per cent in the case of VAT of the prorated target.

“Custom collections 338.6bn represents 99 per cent of prorated target. Other revenues amounting to N1.7 trillion of which the federal government independent revenue of N691.36 billion while GEOs revenue was N873.5 billion.

“On the expenditure side, N8.14 trillion representing 84 per cent of the N9.71 trillion prorated expenditure from January to August has been spent.

“This performance includes expenditure estimates of Government Owned Enterprises (GEOs) but doesn’t include project tied loans

“Of the expenditure, N2.89 trillion was utilized for debt servicing, while N2.57 trillion was utilised for personnel cost including pension and gratuities. As at the end of August, N1.75 trillion has been expended for capital projects, of this amount, N1.723 trillion represents 81 per cent of the aggregate provision for Ministries Department Agencies’ capital prorated, while N36.01bn is expenditure from GEOs.

“So the story here is that the revenue performance aggregate is 73 per cent but the fact is that the non-oil revenue performing very well above the target, while the oil and gas revenue is lagging.

She added that the government borrowed the sum of N3.65 trillion between January and August to finance its N4.3 trillion fiscal deficit. The rest of the deficit was covered by proceeds from the sales of government assets through the privatisation process and a drawdown of bilateral and multilateral tied loans.

“As at August we had a fiscal deficit of N4.29 trillion, this is against the prorated target of N4.61 trillion and we financed this deficit by utilization of N136.77 billion from proceeds of the sales of government assets through the privatisation process, also by drawdown of bilateral and multilateral tied loans in the sum of N473.12 billion and new borrowings of N3.65 trillion from both domestic and foreign sources,” she said.