FG spent 97% of Jan-May revenue on debt servicing

The federal government spent a total of N1.8 trillion on debt servicing out of N1.84 trillion revenue it generated for the five months (January-May) 2021.

This puts the nation’s debt-to-revenue ratio, a key measure of debt sustainability, at 97.8 percent for the period under review.

This means that, for every N100 revenue generated, N97 was expended on debt servicing, leaving the government with a meagre amount to spend on infrastructure — a pointer to gaps in revenue generation and high government spending.

Zainab Ahmed, minister of finance and the national budget, while giving a presentation on the 2021 budget implementation, on Thursday, said the federal government’s share of oil revenues for the five months was N289.61 billion, which represents a 50 percent performance.

Giving the breakdown, non-oil tax revenues totalled N618.76 trillion, company income tax (CIT) and value-added tax collections were ahead of the budget targets with N290.90 billion and N123.85 billion respectively.

“Customs collections was N204.0 billion (86% of target). Other revenues amounted to N762.70 billion, of which Independent revenues was N487.01 billion,” she said.

On the expenditure side, Ahmed said a total of N4.86 trillion was spent in the five months down to May — this excludes government-owned enterprises and project-tied expenditures.

“Of the expenditure, N1.80 trillion was for debt service (37% of FGN expenditures), N1.50 trillion for personnel cost, including Pensions (31% of FGN revenues),” she added.

Ahmed noted that as of May, N973.13 billion had been released for capital expenditure.

She said the gross oil and gas revenue for 2021 was projected at N5.19 trillion and as of May, N1.49 trillion was realised out of the prorated sum of N2.16 trillion — this represents 69 percent performance.

“Oil and gas deductions were N194.31 billion (or 45.8%) more than the budget. This is mainly attributable to petroleum subsidy costs which was not provided for in the 2021 budget,” she said.

“After netting out deductions (including 13% derivation), net oil and gas revenue inflows to the Federation Account amounted to N872.16 billion. This is N864.20 billion or 49.8% less than the projection as of May.

Ahmed said the amount available for distribution from the Federation Account during the period was N2.78 trillion

“The Federal Government received N998.57 billion, while the States and Local Governments received N506.59 billion and N390.48 billion respectively from the Main Pool Account.

“Federal, State and Local governments received N132.70 billion, N442.33 billion and N309.63 billion respectively from the VAT Pool Account.”

She also announced that key parameters as well as other macroeconomic projections driving the medium-term revenue and expenditure framework have been revised in line with the emergent realities.

Inflation projection for 2021 was raised to 15 percent from 11.95 in the 2021 budget. Exchange rate was also adjusted to N410/$1 to reflect the new adjustment by the Central Bank of Nigeria. Oil price benchmark and production output remain unchanged at $40pb and 1.86mpb respectively.