The federal government’s debt service to revenue ratio has increased to 183 percent in the first quarter of 2023.
This information was revealed in the budget implementation report for the same period.The report highlights that the government had initially budgeted for a revenue of N2.16 trillion, but the actual revenue generated was only N1.21 trillion.
This is a significant decrease compared to the N1.48 trillion revenue generated in the first quarter of 2022.The rising debt service to revenue ratio is a cause for concern as it indicates that a larger portion of the government’s revenue is being used to service its debt obligations.
Failure to do so could have severe implications for the country’s overall economic stability and development.
Meanwhile, debt service in the first quarter of 2023 was N2.2 trillion compared to N1.6 trillion budgeted for in the first quarter of the year.
This represents a debt service to revenue ratio of 183 percent.
Nigeria has been grappling with acute fiscal shortfall since the ruling APC government took over failing to meet its revenue targets while increasing its debt service.
In 2022, the total debt service was N5.65 trillion, which was an alarming 97.4 percent of the budgeted revenue.
During the same year, the federal government received a total revenue of N5.8 trillion down from N6.7 trillion received in the same period in 2021.
The government recorded a fiscal deficit of N7.5 trillion or 129 percent of actual revenue collected.
The trend appears to be continuing in 2023 with the government failing to meet its revenue targets but blowing past its expenditure targets. Its total expenditure (excluding GOEs) was N3.4 trillion higher than the N3.3 trillion budgeted.
However, recurrent non-debt expenditure was just N1.2 trillion compared to budgeted revenue of N1.63 trillion. The major contributory factor to the wider fiscal deficits remains the government’s rising debt service obligations.
A breakdown shows that while total debt service rose slightly to N1.3 trillion (budget N1.2 trillion).
However, Ways and Means, which is the overdraft lent to the government by the central bank recorded a debt service of N912 billion versus a budget of N300 billion.
Capital expenditure was N175 billion versus N841 billion targeted.
The government also performed poorly with its financing activities achieving just N2 trillion from domestic debts versus N2.695 trillion budgeted. Thus, it ended the first quarter of the year with a net deficit (excluding GEOs budget and project-tied loans) of N2.3 trillion.
Meanwhile, the federal government announced on Monday that it is proposing a N26 trillion budget for the 2024 fiscal year.
This compares to the N21.8 trillion budget currently running and approved under the administration of President Muhammadu Buhari.