Escalating debt costs: Nigeria may face fresh financial crisis over revenue challenges -BudgIT

Motolani Oseni

A civic-tech organisation based in Lagos, BudgIT has warned that Nigeria may face a fresh financial crisis as a result of government failing revenues from Oil and Non-Oil sector.

In a document signed by its Communications Associate, Shakir Akorede, noted that the federal government 2018 budget performance, released on September 2, 2019, the civic-tech organization points out that the government spent a sum of N7.51 trillion based on a total revenue of N3.86 trillion, creating a deficit of N3.64 trillion.

BudgIT analysis on Tuesday, also noted that while FG planned to earn N7.16 trillion in 2018, it was only able to reach N3.85 trillion, which represents 54per cent revenue performance.

The civic-tech organization’s examination stated, “the government is also spending more on debt servicing at the same time its debt profile is growing astronomically.

Although it recorded a revenue of N3.86 trillion, FG spent N5.86 trillion on recurrent expenditure, meaning that N2trillion was borrowed to fund recurrent expenses.

“In 2018, Federal Government spent N2.09 trillion on servicing public debts, a figure that grew from N1.63 trillion in 2017. As it is, FG is spending so much on servicing the debt while it plans to even borrow more.

The government borrowed a total of N1.74 trillion in 2018, yet, the sources for additional deficit (borrowing) of N1.90 trillion was not stated in its report,” says BudgIT analysis.

The statement noted that oil accounts for 51per cent of 2018 public revenues, while independent revenue from government agencies grew from N295 billion to N395 billion. CIT also had an impressive 21per cent growth, reaching N660 billion.

“We have seen the growth in oil revenue (due to higher prices and more stable production) that shot up from N1.12 trillion in 2017 to N1.96 trillion in 2018, FG’s revenue grew from N2.66 trillion in 2017 to N3.86 trillion in 2018.

Worthy of note, however, is the fact that the federal government did not record any earned income from recovered assets or sales of oil and gas assets in this year”, the statement by BudgIT explained.

Meanwhile, a document released by the Federal Government, the revenue breakdown goes thus: Oil Revenue: N1.96 trillion; Non-Oil Revenue: N1.12 trillion; FG Independent Revenues: N395 billion; Other Financing Sources: N385 billion; Special Accounts: N306 billion; and Exchange Rate Differential: N79 billion.

On further details, BudgIT analysis reads, “The total recurrent expenditure shot up to N5.39 trillon in 2018, an N800 billion growth in one year without new minimum wage implementation.

“The government spent N5.86 trillion on recurrent expenditure and statutory transfers (78per cent of the total expenditure), while 22per cent of total expenditure was spent on capital expenditure.

“A sum of N329 billion was utilized for power, works and housing projects, N139 billion for transport projects, N52 billion for health projects, N47 billion for education projects, N71 billion for water resources and N135 billion for agriculture projects respectively.

Health and education are still poorly invested in.

FG personnel costs rose from N1.8trillion in 2017 to N2.1trillion in 2018, without the full implementation of the new minimum wage plan.