Gists By FG to service debt with N14.6tn
Minister of Finance, Budget and
National Planning, Mrs Zainab Ahmed
The Federal Government plans to spend
a total sum of N14.6tn on debt servicing
between 2022 and 2024, an analysis of
official data have shown.
Projections in the Medium-Term
Expenditure Framework and Fiscal
Strategy Paper for 2022 to 2024 show
that the government intends to spend
N3.6tn on debt servicing in 2022, N4.9tn
in 2023 and N6.1tn in the 2024 fiscal
year, amounting to N14.7tn.
The total projected expenditure for 2022
stood at N13.95tn, comprising N3.4tn
for non-debt expenditure, N3.6tn for
debt servicing and N3.61tn for the
implementation of capital projects.
For 2023, the Federal Government
increased its total projected spending to
N15.54tn, with N6.49tn allocated for
non-debt expenditure, and N3.61 for
capital expenditure.
In the 2024 fiscal year, the government
plans to spend N16.8tn to finance its
budget, with debt servicing and
recurrent expenditure constituting the
largest shares, at N6.1tn and N6.4tn
respectively.
Only N3.61tn was projected to be spent
on capital projects in the same year.
The MTEF/FSP report said the 2022 and
2023 budgets would be prepared based
on an oil production volume of 1.88 and
2.23 million barrels per day,
respectively, with a benchmark oil price
of $57 per barrel and an exchange rate
of N410.15 to a dollar.
The parameters that would be applied
in the preparation of the 2024 budget
include an oil production volume of 2.2
million bpd, a benchmark oil price of
$55 per barrel and an exchange rate of
N410.15 per dollar.
The Federal Government had repeatedly
defended the country’s debt level,
describing it as sustainable.
The Minister of Finance, Budget and
National Planning, Mrs Zainab Ahmed,
had at several occasions insisted that
Nigeria does not have a debt problem.
She said what the government needed to
do was to increase its revenue-
generating capacity in order to boost
revenue to about 50 per cent of GDP.
But several economic experts have said
the government’s huge borrowings and
debt servicing obligations posed a
danger for the economy.
A financial expert and the Chief
Executive Officer of Flame Academy
Consulting, Orji Udemezue, said,
“Nigeria is sliding into a serious debt
trap. Looking at our debt servicing to
revenue ratio, Nigeria is having it very
horrible because we are not getting
enough revenue from our huge
economic activities.
“Therefore we spend almost everything
we get from revenue in servicing our
debt, and that is a major liquidity
problem. And that will lead to very
imminent inability to meet our debt
obligations and possibly begin to live at
the mercy of our creditors: multilateral,
bilateral and commercial creditors.”
A financial analyst and professor of
Economics at the Olabisi Onabanjo
University Ago-Iwoye, Ogun, Sheriffdeen
Tella, had expressed worry over the
current debt servicing to revenue ratio
of the country and the government’s
tendency to continue borrowing.
“The trend is hampering economic
development and advancement,” he
added.