Home Business Nigeria Economy Faces Huge Revenue Challenge Amidst Escalating Debt Costs, Says BudgIT

Nigeria Economy Faces Huge Revenue Challenge Amidst Escalating Debt Costs, Says BudgIT

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A civic-tech organization based in Lagos, BudgIT  has warned that Nigeria might be facing another financial crisis as a result of government failing revenues from Oil and Non-Oil sector.

According to a statement by signed by 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 N7.51trillion based on a total revenue of N3.86trillion, creating a deficit of N3.64tillion.

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

According to BudgIT’s examination, “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 N3.86trillion, FG spent N5.86trillion on recurrent expenditure, meaning that N2trillion was borrowed to fund recurrent expenses.

“In 2018, FG spent N2.09trillion on servicing public debts, a figure that grew from N1.63trillion in 2017. As it is, FG is spending so much on servicing debt while it plans to even borrow more. The government borrowed a total of N1.74trillion in 2018, yet,  the sources for additional deficit (borrowing) of N1.90trillion 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 N295billion to N395billion. CIT also had an impressive 21per cent growth, reaching N660billion.

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

According to the document released by the Federal Government, the revenue breakdown goes thusly: Oil Revenue: N1.96trillion; Non-Oil Revenue: N1.12trillion; FG Independent Revenues: N395billion; Other Financing Sources: N385billion; Special Accounts: N306billion; and Exchange Rate Differential: N79billion.

On further details, BudgIT analysis reads, “The total recurrent expenditure shot up to N5.39trillon in 2018, a N800billion growth in one year without new minimum wage implementation.

“The government spent N5.86trillion 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 N329billion was utilized for power, works and housing projects, N139billion for transport projects, N52billion for health projects, N47billion for education projects, N71billion for water resources and N135billion 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.

“The government claims that it spent N1.65trillion on capital expenditure in 2018.”

In his reaction,  BudgIT Principal Lead, Gabriel Okeowo, said that BudgIT will ask for details of these expenditures for proper verification and public accountability.

“While we wonder why other financing sources are not explained by the government, it is clear that Nigeria has a huge revenue problem and the current pace of recurrent expenditure growth (mainly salaries and debt servicing) is not sustainable,” Okeowo submits.

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