FG spends 74% of revenue on debt service in first 8 months of 2021

The Federal Government spent N74 out of every N100 earned servicing debt between January and August 2021, according to fresh data provided by Zainab Ahmed, minister of finance, budget and planning.

Ahmed said the Federal government’s debt servicing cost came to N2.89 trillion in the first eight months of the year as against revenues of N3.9 trillion, which implies that the government spent 74 percent of its revenues in the period repaying creditors.

Ahmed disclosed this during the public presentation and breakdown of the highlights of the 2022 appropriation bill held in Abuja on Friday.

According to Ahmed, Nigeria’s total expenditure stood at N8.14tn in the months through August, out of which N2.75tn was spent on overhead cost, and N1.75tn was expended on capital projects.

The government was however able to attain 73 percent of its revenue target in the period thanks to a rare boost from non-oil revenues.

“For the 2021 performance, between January and August, revenue generated was N3.93tn which was 73 per cent of the prorated target. Out of this amount, CIT and VAT collections were N547.5bn and N235.7bn respectively representing 121 percent 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 N1.7tn of which the federal government independent revenue of N691.36bn while GEOs revenue was N873.5bn,” Ahmed said.

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

The government borrowed N3.65tn between January and August to finance its N4.3tn fiscal deficit, part of which was financed through proceeds from the sales of government assets and a drawdown of bilateral and multilateral tied loans.

Lolade Akinmurele

Ololade Akinmurele a seasoned journalist and Deputy Editor at BusinessDay, holds a crucial position shaping the publication’s editorial direction. With extensive experience in business reporting and editing, he ensures high-quality journalism. A University of Lagos and King’s College alumnus, Akinmurele is a Bloomberg-award winner, backed by professional certifications from prominent firms like CitiBank, PriceWaterhouseCoopers, and the International Monetary Fund.

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