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FG’s debt service gulps 99% of revenue in 6 months

What FG can do to tackle high debt cost

The federal government deployed almost all of its revenues generated within the first half of the year – 99 per cent – to service debt, the budget office stated on Monday.

Figures show that between January and June 2023, the total retained revenue of the federal government totalled N4.06 trillion, while it used as much as N4.02 trillion to service debt within the same period.

Olumide Ayodele, technical assistant to the director general of the budget office, who spoke on the matter in Abuja, said government revenues have remained below expectations as out of the N5.52trillion targeted for the first six months of the year, some N4.067 trillion was generated, indicating N1.46 trillion shortfall.

Ayodele spoke at the training of budget officers in federal ministries, departments and agencies of government ahead of the 2024 budget preparations.

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According to him, the extent to which the government can mobilize revenue within its agencies will also determine the level of services it can provide citizens.

Of the total N4.067 trillion retained revenue for the period, N604.1 billion was generated from the oil sector, while non-oil revenue was N1.14 trillion. Company Income Tax (CIT) and Value Added Taxes (VAT) were N592.68 billion and N195 billion respectively.

The total revenue collected by the Customs Service was N306.18 billion, while other revenues amounted to N2.14 trillion.

According to Ayodele, of the N7.76 trillion actual spending for the year’s first half, N4.02 trillion was spent on debt servicing and N2.28 trillion on personnel costs, including pension.

He, however, noted that only about N475.98 billion has been released for capital expenditure as of June 2023.

“Government is not mobilizing enough revenue but is expected to provide efficient services to the citizens. When we provide efficient services, people will be willing to pay,” he said.

Read also Debt servicing gulps N1.24 trn in Q1, 2023

Speaking further, Ayodele stressed the importance for MDAs to ensure that funds provided are used strictly for capital projects, “every fund provided for capital spending must be effectively utilized because they are borrowed funds.

“The orientation of the current Administration is not to borrow further; the cost of servicing previous loans is not so high, amounting to over 50 per cent of government revenue. The government is trying to reduce borrowing while increasing revenue collections.”

He also urged that in preparation for the 2024 budget, trainees should focus on completing ongoing projects rather than new ones. According to him, this will help check and reduce cases of abandoned projects across the country.

In his remarks, Isah Gwangwazo, the director of expenditure and socials at the budget office, noted that the training was aimed at enhancing the collective capacity of participants to effectively use the Budget Preparation Sub-System of the Government Integrated Financial Management Information System in the budget preparation process.

Representing Ben Akabueze, the director general of the budget office of the federation, Gwangwazo said that the training session underscores the government’s determination to enhance fiscal discipline and accountability in the management of public funds.

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“Collaboration and synergy between the various MDAs is paramount to achieve this. We must harmonize our sectoral policies and programmes with the overarching National Development Plan 2021- 2025 and the specific programmes of this Administration.”We must ensure that our efforts are synchronized, resources are optimally utilized, and the impact of our collective work resonates across the nation.

“It is essential to note that President Tinubu’s Agenda sets the stage for a transformative era in our great nation. This agenda outlines the framework for sustainably achieving inclusive socio-economic growth, infrastructural development, and the overall well-being of our people. It is, therefore, incumbent upon us to integrate the tenets of this agenda into our respective roles and responsibilities,” he said.