The federal government plans to spend 35.60 percent of projected revenue in the 2022 budget to service debt.
The 35.60 percent earmarked for debt servicing represents N3.61 trillion of the N10.13 trillion revenue that has been projected to fund the 2022 budget and 22 percent of total expenditure.
This was disclosed by the Minister of Finance, Budget and National Planning, Zainab Ahmed, during the public presentation and breakdown of the 2022 appropriation bill on Friday.
According to her, the government further intends to spend N6.83 trillion on recurrent expenditure, which represents 41.7 percent of the entire N16.39 trillion budget.
But aggregate capital expenditure which is inclusive of the capital component of statutory transfer, government owned enterprises and project-tied load expenditure would gulp N5.25 trillion.
Of the N10.13 trillion revenue projected, 34.9 percent of projected revenues is expected to come from oil related sources at N3.16 trillion while 65.1 percent is to be earned from non-oil sources at N2.313 trillion.
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Also, federal government independent revenues are projected to be N1.82 trillion, including Grants and Aid of N63.38 billion, as well as the revenues of 63 Government-Owned Enterprises.
She said, “We have had to resort to borrowing to enhance our fiscal gaps. However, we believe that the debt level of the Federal Government is still within sustainable limits.
“Borrowings are essentially for Capital Expenditure and Human Development, as specified in Section 41[1]a of the Fiscal Responsibility Act 2007.
“Having witnessed two economic recessions we have had to spend our way out of recession, which contributed significantly to the growth in the public debt; it is unlikely that our recovery from each of the two recessions would have been as fast without the sustained government expenditure funded partly by debt.
“Our target over the medium term is to grow our revenue-to-GDP ratio from about 8 percent to 15 percent by 2015. At that level of revenues, the debt-service-to-revenue ratio will cease to be worrying.”
The Director General of the Budget Office, Ben Akabueze in his remark, explained that N5.01 trillion that the government planned to borrow to fund the N6.26 trillion deficit should not be considered as a problem as widely seen.
According to him, “Our problem is not that we spend too much but we spend too little. That is why people do not get all that they expect from the government.
“Revenue generation currently remains our main fiscal challenge which we must address.”
Highlights of the budget shows that oil benchmark for the 2022 appropriation is $57 per barrel, while the exchange rate is N410.5 per dollar, GDP growth of 4.2 percent was projected while inflation rate is put at 13 per cent.
It is projected oil production will be at 1.88m barrels per day including condensates.
The proposed expenditure comprises: Statutory Transfers of N768.28 billion; Non-debt Recurrent Costs of 6.83 trillion; Personnel Costs of N4.11 trillion; Pensions, Gratuities and Retirees’ Benefits N577.0 billion.
Others include; Overheads of N792.39 billion; Capital Expenditure of N5.35 trillion, including the capital component of Statutory Transfers; Debt Service of N3.61 trillion; and Sinking Fund of N292.71 billion to retire certain maturing bonds.
