Over the period spanning 2015 to 2020, the Federal Government of Nigeria has expended at least N4.546 trillion servicing her debt. This tabulation was done by NATIONAL ECONOMY upon the revelation by the minister of finance, budget and national planning, Zainab Ahmed that out of the N6.46 trillion spent on recurrent expenditure, the sum of N3.27 trillion was spent on debt service in 2020.
It may be recalled that during the 2015 fiscal year, a total of N74.63bn was spent on debt service; in 2016, N106.7bn was spent servicing debt, N160.31bn in 2017, N534.12 in 2018, N470.29bn in 2019, and N3.27 trillion in 2020, to total N4.546 trillion.
The humungous upshoot over the last three fiscal years, though, can partially be ascribed to the increasingly widening gap in exchange rates between the naira and the US dollar, which has more than doubled during the period. The years of steep upshoot also coincide with the years of economic recession, occasioned by oil price slump on the international market and Covid-19 more recently.
This is just as the honourable minister disclosed that about 1.80 trillion, approximately 10 percent of the total amount appropriated as budget for 2020 was expended on capital expenditure. That accounts for almost 90 percent of the total appropriated for capital expenditure in the 2020 budget.
The figures were released yesterday by the minister of finance, budget and national planning, Zainab Ahmed during the public presentation of the 2021 approved budget in Abuja.
The federal government will spend N3.32 trillion, which is a 24.5 per cent of the total expenditure, and 12.6% higher than 2020 revised budget on debt servicing under the 2021 budget.
The 2021 aggregate FGN expenditure (inclusive of government owned enterprises and project-tied loans) is projected to be N3.59tn, which is 25.7% higher than revised 2020 Budget.
Recurrent (non-debt) spending is estimated to amount to N5.99tn. It is 44.1% of total expenditure, and 13.3% higher than 2020 revised estimates (mainly reflecting increases in salaries & pensions).
Aggregate capital expenditure of N4.37 trillion is 32.2% of total expenditure; and 62.9% higher than the 2020 revised budget (inclusive of capital component of statutory transfers, GOEs capital & project-tied loans expenditures).
The 2021 budget has overall budget deficit of N5.60 trillion, representing 3.93% of GDP. Meanwhile, the minister of finance stated that the budget deficit is to be financed mainly by borrowings: Domestic sources: N2.34 trillion; foreign sources: N2.34 trillion; multi-lateral/bi-lateral loan drawdowns: N709.69 billion; and privatization proceeds: N205.15 billion.
The aggregate revenue available to fund the 2021 budget is projected at N7.99 trillion (36.9% higher than the 2020 projection of N5.84 trillion).
To promote fiscal transparency, accountability & comprehensiveness, the budgets of 60 government owned enterprises (GOEs) are integrated in the FGN’s 2021 budget proposal.
In aggregate, 30% of projected revenue is to come from oil-related sources while 70% is to be earned from non-oil sources.
Crude oil price benchmark was retained at $40 per barrel. The World Bank forecasts $44pb average crude oil price in 2021.
Ahmed also remarked that the Finance Act 2020 is to ensure that there is a balance between broader macroeconomic strategies to attract investment, grow the economy, create jobs as well as providing immediate fiscal strategies for accelerated domestic revenue mobilisation, in response to the COVID-19 pandemic and the domestic/global economic downturn.
A further look at the 2021 budget shows that N22.08 billion will be paid as balance payment for the procurement of 3 X JF -17 Thunder Aircraft, support equipment and spares including targeting Pod for JF –17, complete with aircraft arms & ammunition N9.69 billion.
There is also allocation for procurement of 30/32/35 metre hydro survey ship & Landing ship tankN10.44 billion, procurement of 3 X AW109 Helicopters and part payment for procurement of 1 X AW139 Helicopter.
Also, N4.4bn has been earmarked for the completion of Naval War College Nigeria complex. N3.89 billion upgrade of Nigerian Navy reference hospital in Ojo, Lagos.
According to the finance Minister, “revenue generation remains the most critical fiscal issue over the medium term. Several measures are being instituted to improve government revenue and entrench a regime of prudence with emphasis on achieving value for money.
“Improving the tax administration framework to optimize government revenue is a major thrust of the Administration’s Strategic Revenue Growth Initiatives (SRGI).