Nigeria’s National Assembly is vested with constitutional powers over borrowings and revenue expenditure. The Executive merely executes legislative appropriation and approvals. In a sense, the buck truly ends with the National Assembly, which has to approve every borrowing and budgetary expenditure, and a critical majority of the people need to know this and hold the legislature to greater account for borrowing judgment and fiscal discipline. As chaos looms over borrowings, with debt servicing of N2.02tn gulping 91% of revenue; the people must raise questions on fiscal management and demand stronger institutional vaccination against squandermania.
The Government of the Nigerian Federation spent N2.02tn on debt servicing in the first six months of this year. This represents 90.58 per cent of the total revenue of N2.23tn generated by the FG within the period, a development which signifies a dangerous trend for the economy, as debt servicing almost cancels out with revenue.
Technical Adviser to the Director General of the Budget Office, Alfred Okon, disclosed the figure while presenting the “Overview of FGN 2022 Budget Call Circular” report.
Okon made the presentation on Thursday at a training on “Government Integrated Financial Management Information System Budget Preparation Subsystem for Ministries, Department and Agencies,” as the Punch newspaper reports.
The report stated that as of June 2021, the Federal Government’s retained revenue was N2.23tn, which is 67.58 per cent of pro-rata target of N3.3tn for the review period. This means that the Federal Government failed to realize N1.07tn of its revenue target in the first half of the year.
The total revenue comprises oil revenue of N492.44bn, non-oil tax revenue of N778.18bn, Company Income Tax of N397.02bn, Value Added Tax of N129bn and Customs collections of N234.02bn.
Other revenues amounted to N922.09bn, of which independent revenues accounted for N558.13bn.
Reacting to a Punch enquiry, a political economist and former presidential candidate, Prof. Pat Utomi, explained that the implication of the development was that the Federal Government borrowed to finance other expenditures that it incurred within the period.
Utomi said, “The direct implication is that any additional money that the government spends is from additional borrowing; so what it means is that the borrowing will increase. And because I do not see any serious programme to trim or moderate expenditure, it means we are going to be borrowing to the quantum of our budget projections.
He urged the Federal Government to re-evaluate their borrowing approach by focusing foreign loans on developing value-adding assets instead of financing consumption.