The federal government spent 41 per cent of the revenue generated in 2022 to service its N44.06 trillion debt, the Minister of Finance, Budget and National Planning, Zainab Ahmed has disclosed.
Also, the government has extended the 2022 budget implementation by three months ending March 2023 over the weak revenue performance last year.
The minister also said she is shocked by the recent downgrade of Nigeria’s credit rating by Moody’s Investors Service, a US-based rating agency.
Last weekend, Moody’s had downgraded Nigeria’s credit rating from B3 to Caa1, saying the government’s fiscal and debt position was expected to continue to deteriorate.
Ahmed made the disclosure yesterday at the weekly ministerial briefing in Abuja.
The budget for 2022 as amended projected N18.1 trillion spending out of which N8.17 trillion deficit will be sourced through domestic borrowing.
But even more worrisome for the government is that 41 per cent of the revenue generated was spent to service Nigeria’s debt, the Minister revealed.
Personnel cost including pensions gulped 31 per cent while only 15 per cent was released for capital investments.
Ahmed said, “2022 fiscal outcomes impacted by oil revenue performance and you will also see that non-oil revenues have been on the rise. As at November 2022, aggregate Federal Government revenue was N6.5trn and this is 66.7 per cent of the target that we have set for 2022.
“The federal government’s share of oil revenues to fund the budget was N586.7bn representing 29.2 per cent performance while none-oil revenues totally N2.09trn representing an out-turn of 99.1 per cent compared to the budget projections.
“Non-oil revenues continue to outperform oil revenues. The Company Income Tax and the Value Added Tax as the top performers recording 129.8 per cent and 93.3 per cent of their respective targets.
“On the expenditure side, total expenditure to fund the 2022 budget as amended and also remember we had a supplementary budget was estimated at N18.1trn, however, as at November 2022, spending fell short of the target by 22.6 per cent.
“The implementation of the 2022 budget has been extended for the capital to 31st of March 2023. Of the expenditure out-turn so far for 2022, 41 per cent of the spending has been on debt service, 31 per cent was utilized for personnel cost including pensions and 15 per cent was released for capital investments.”
She said the combined fiscal deficit for 2022 was estimated at N8.17trn with 54 per cent of the deficit financing to be obtained from domestic sources.
Recently, Moody’s Investors, a US-based credit rating agency downgraded Nigeria’s sovereign debt from B3 to Caa1 over weak oil revenues.
The downgrade also affected the rating of nine major banks in Nigeria which was reviewed to Caa1 from B3 by Moody’s.
Nigeria’s total debt stock as of September 2022 is N44.6trn or $101.9bn with N17.14trn ($39.66bn) as an external component.
Borrowings from external sources to meet the 2022 budget deficit was no longer an option for the FG but domestic borrowing by the government is overcrowding the chances of businesses to borrow, experts have suggested.
According to Ahmed, the ministry was assigned 40 deliverables by President Buhari out of nine priority areas.
Ahmed revealed that to support domestic revenue mobilisation efforts, the revenues collected by the Federal Inland Revenue Service grew from N6trn in 2021 to N10.1trn in 2022.
“These are federation revenue and not federal government revenues. Of this N10trn, N4.,1trn is oil revenue while N5.96trn is non- oil revenue. So, these are federations revenue,” she explained.
She said the ministry introduced the Finance Act as an annual tradition to support the annual budget in the delivery of the fiscal strategy of the FG.
She explained that the legislature has conveyed the Finance Bill 2022 for his approval to support the implementation of the 2023 budget.
The finance minister said, “The president has not been able to sign on it because there were two very significant provisions in the bill that the president wanted the National Assembly to revisit and as you know, the National Assembly has been very busy with a lot of things including the works in their constituencies.”