By NewsBits
By the time President Muhammadu Buhari’s administration will be handing over to whoever emerges as his successor on May 29, 2023, they would leave a debt stock debt of over N77trillion for the incoming government from the current debt of N44.06 trillion as at third quarter of last year.
This worrisome announcement is coming from the Federal Government’s owned Debt Management Office (DMO). While the ways and means is about N22.3 trillion with an interest rate of 18.5 per cent, government is expected to borrow additional N8 trillion before it exits office on May 29, this year.
Speaking at the 2023 Budget breakdown in Abuja, the Director General, Debt Management Office (DMO), Ms Patience Oniha said that if the new borrowings are included in the current debt of N44.06 trillion, the total debt stock would amount to N77trillion. Oniha said the debt stock is still growing from the issuance of promissory notes which are not true borrowing as such by the government.
According to her, “It will be safe to say that we will be looking at N77trillion. While the debt is growing because of new borrowing, revenue is receiving significant importance. Like DMO always says, you can’t talk about debt without talking about revenue. We need the two to work together.”
Earlier, the Minister of Finance Budget and National Planning, Mrs Zainab Shamsuna Ahmed, disclosed that Nigeria is not planning on restructuring its debt as it remains committed to meeting its domestic and external debt obligations.
“The FGN will however continue to utilise appropriate debt management tools to streamline the cost and risk profile in the debt portfolio, including through concessional loans, spreading out of debt maturities to avoid bunching, and re-profiling of the debt maturities by refinancing short-term debt using long-term debt instruments,” the minister said.
Ahmed explained that most vessels lifting oil from Nigeria are not paying taxes stressing that the government would make sure that those vessels would begin to pay taxes to augment the budget.
She announced that the government would exit some of the pioneer companies that have been enjoying tax exemptions so as to bring in new ones. “We have to create a balance that we are not giving much more than we are getting” she added.
She revealed that as of November 2022, government’s retained revenue was N6.50 trillion, 87 per cent of the prorata target of N7.48 trillion and its share of oil revenues was N586.71 billion (representing 35.7 per cent performance), while non-oil tax revenues totalled N2.09 trillion – a performance of 123.3 per cent.
“Companies Income Tax (CIT) and Value Added Tax (VAT) collections were N1.08 trillion and N295.2 billion, representing 158.6 per cent and 124.3 per cent of their respective targets. Customs collections (comprising import duties, excise, fees, and special levies) exceeded the target by N15.42 billion (ie, 102 per cent performance). Other revenues amounted to N3.72 trillion, of which independent revenue was N1.32 trillion.
“The aggregate budgeted expenditure for 2022 (inclusive of the supplementary budget of N819.5 trillion) was N18.14trillion, with a pro-rata spending target of N16.63 trillion at the end of November.
“The actual spending as of November 30 was N12.87 trillion. Of this amount, N5.24 trillion was for debt service; N3.94 trillion for personnel costs, including pensions; statutory transfers, overhead and service wide votes expenditures totaled N1.81 trillion; and N1.88 billion was released for capital expenditure.
“The fiscal deficit for 2022 was estimated at N8.17 trillion, inclusive of the Supplementary budget. As at November 30, 2022, the deficit was N6.37 trillion. The deficit was totally financed by borrowings, mostly from domestic sources,” the minister noted.
Speaking on key assumptions and macro framework for the 2023 Budget, the minister stated that the oil price benchmark is set at US$75 per barrel while some of the parameters underlying the 2023 projections have deviated from the projections in the National Development Plan (NDP) 2021-2025.
According to her, they have been updated based on a combination of current realities and a modified medium-term outlook, adding that the real Gross Domestic Products (GDP) growth is projected at 3.75 per cent in 2023 compared to 4.39 per cent in the NDP.
“Growth is expected to moderate to 3.30 per cent in 2024 before picking up to 3.46 per cent in 2025. The inflation rate is projected to average 17.16 per cent in 2023, and the 14.93 per cent projected in the NDP for 2023” she said.
