Debt servicing surpasses revenue by N310b as FG releases fiscal report

By EDU ABADE, Business Editor

  • Govt to spend N6.72tr on fuel subsidy in 2023

The cost of servicing debt surpassed the federal government’s retained revenue by N310 billion in the first four months of 2022.

The federal government said this in its 2022 fiscal performance report for four months released on Thursday.

According to the report, the Federal Government’s total revenue for the period was N1.63 trillion, while debt servicing gulped N1.94 trillion.

 While providing update on the budget performance in Abuja, Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, said urgent action was urgently required to address under-performance of revenue and expenditure efficiency at the national and sub-national levels.

“The aggregate expenditure for 2022 is estimated at N17.32 trillion, with a pro rata spending target of N5.77 at the end of April,” the report reads, adding that the actual spending as of April 31 amounted to N4.72 trillion, of which N1.94 trillion was for debt servicing and N1.26 trillion was for personnel costs and pensions.

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 “As of April 2022, N773.63 billion has been spent on capital expenditure, while the Federal Government’s retained revenue was only N1.63 trillion, which is 49 per cent of the pro rata target of N3.32 trillion,” she said.

The document added that the Federal Government’s share of oil revenues came to N285.38 billion, representing 39 per cent performance, while non-oil tax revenues amounted to N632.56 billion, which translated to 84 per cent performance and that based on the figures, the Federal Government generated N401.8 billion from Company Income Tax (CIT) and Value Added Tax (VAT).

 “CIT and VAT collections amounted to N298.83 billion and N102.97 billion, representing 99 per cent and 98 per cent of their respective targets. Customs collections, comprising import duties, excise and fees and the federation account special levies, trailed target by N76.77 billion, amounting to 25.42 per cent. Other revenues came to N664.64 billion, of which independent revenue accounted for N394.09 billion,” the report added.

 Meanwhile, the Federal Government has said it would make provision for N6.72 trillion for fuel subsidy in 2023.
Ahmed disclosed this in Abuja on Thursday during the 2023-2025 Medium Term Expenditure Framework and Fiscal Strategic Paper (MTEF and FSP) Public Consultation, maintaining that the amount would remain and be fully provided for by the Nigerian National Petroleum Company (NNPC) Limited on behalf of the Federal Government.

 The minister, however, said the NNPC, which had funded the fuel subsidy until last month, would henceforth leave that responsibility to the federation, adding that this would even create a greater strain on the fiscal position of the federal government, describing fuel subsidy as unsustainable.
“It will remain and be fully provided for by the NNPC on behalf of the federation if government allow this to continue,” she added, explaining that another scenario would be that petrol subsidy would remain till mid-2023 based on the 18-month extension announced in early 2021, in which case, only N3.36 trillion would be provided for.

 “Both scenarios have implications for net accretion to the Federation Account and projected deficit levels. There will be tighter enforcement of the performance management framework for Government Owned Enterprises (GOEs) that will significantly increase operating surplus and dividend remittances in 2023,” she said.
The minister added that the Federal Government recorded a N3.09 trillion deficit in its 2022 budget implementation between January and April this year, adding that the deficit underscored the fiscal challenges confronting the Federal Government.

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