Published By: Kazeem Ugbodaga
7th October, 2022
Nigeria’s president, Muhammadu Buhari is upbeat that the country’s humongous N42.8 trillion debt profile is nothing to worry about, as it is still within the self-imposed limits.
Buhari, who spoke while presenting the 2023 budget to the National Assembly on Friday, said as at the end of July 2022, the fiscal operations of the Federal Government resulted in an estimated budget deficit of N4.63 trillion.
This, he said represented 63 percent of the estimated deficit for the full year, which is largely attributable to revenue shortfalls and higher debt service obligations resulting from rising debt levels and interest rates.
“The deficit was mainly financed through domestic borrowing amounting to N4.12 trillion. Hence, total public debt stock increased from N39.6 trillion as at the end of December 2021 to N42.8 trillion as at the end of June, 2022.
“However, our debt position remains within cautious and acceptable limits compared to peer countries. As at the end of June 2022, total public debt is within our self-imposed limit of 40 percent of GDP, which is significantly below the 55 percent international threshold for comparator countries, and a global average of 99 percent post-COVID-19.
“Nonetheless, our debt-service-to-revenue ratio needs close attention. The current low revenue performance of government, as reflected in the lowly revenue-to-GDP ratio of just about 8 percent. Our medium-term objective remains to raise this ratio to 15 percent, at which the debt service to revenue ratio will cease to be a concern,” he said.
On the expenditure side, Buhari said the sum of N8.29 trillion had been spent by July 31 2022 out of the total appropriation of N17.32 trillion.
He explained that despite the nation’s revenue challenges, “we have consistently met our debt service commitments. Staff salaries and statutory transfers have also been paid as and when due.
“Total non-debt recurrent expenditure in January to July 2002 was 3.24 trillion Naira, of which 2.87 trillion Naira was for Salaries, Pensions and Overheads. A total of 3.09 trillion Naira was spent on debt service obligations during the period.
“Furthermore, about 1.48 trillion Naira had been released to MDAs for capital expenditure as at the end of July 2022. I am pleased to inform you that we expect to fund MDAs’ capital budget fully by the end of the fiscal year 2022.
“To further address structural problems in the economy and drive growth, capital releases thus far have been prioritised in favour of critical ongoing projects in the power, roads, rail, agriculture, as well as health and education sectors,” he added.
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