At 54% 2018 Revenue Performance, Nigeria Facing Another Financial Crisis, Says BudgIT

BudgIT, Nigeria’s pioneer the civic-tech organization engaged in social advocacy to simplify the budget and public spending for citizens, on Tuesday said at a time of dwindling revenue, and bloating debt servicing cost, Nigeria could be facing another financial crisis.
In an analysis of the federal government 2018 budget performance, BudgIT said the government spent a total of N7.51tn while earning N3.86tr in total revenue, resulting in a N3.64tn, or 48.47% deficit.
While the Federal Government planned to earn N7.16tn in 2018, it was only able to garner N3.85tn, which represents 54% revenue performance, the statement by Shakir Akorede, Communications Associate at BudgIT added.
BudgIT’s said its research showed that despite revenue of N3.86tn, FG spent N5.86tn on recurrent expenditure, meaning that N2tn was borrowed to fund recurrent expenses, just as it is also spending more on debt servicing, at the same time its debt profile is growing astronomically.
“In 2018, FG spent N2.09tn on servicing public debts, a figure that grew from N1.63tn in 2017.
“As it is, FG is spending so much on servicing the debt while it plans to even borrow more. The government borrowed a total of N1.74tn in 2018, yet, the sources for additional deficit (borrowing) of N1.90tn was not stated in its report” says BudgIT analysis.
However, oil accounted for 51% of 2018 public revenues, while independent revenue from government agencies grew from N295bn to N395bn, just as Company Income Tax (CIT) had an impressive 21% growth, reaching N660bn.
“We have seen the growth in oil revenue (due to higher prices and more stable production) that shot up from N1.12tn in 2017 to N1.96tn in 2018, FG’s revenue grew from N2.66tn in 2017 to N3.86tn in 2018.
It expressed curiosity that the government remains silent about earned income from recovered assets or sales of oil and gas assets in the review period, with official records giving revenue breakdown to include: Oil Revenue: N1.96tn; Non-Oil Revenue: N1.12tn; FG Independent Revenues: N395bn; Other Financing Sources: N385bn; Special Accounts: N306bn; and Exchange Rate Differential: N79bn.
BudgIT said further analysis of the data showed that “the total recurrent expenditure shot up to N5.39tn in 2018, a N800bn growth in one year without new minimum wage implementation.
“The government spent N5.86tn on recurrent expenditure and statutory transfers (78% of the total expenditure), while 22% of the total expenditure was spent on capital expenditure.”
Also, the sum of N329bn was utilized for power, works and housing projects, N139bn for transport projects, N52bn for health projects, N47bn for education projects, N71bn for water resources and N135bn for agriculture projects respectively. Health and education are still poorly invested in.
FG personnel costs rose from N1.8tn in 2017 to N2.1tn in 2018, without the full implementation of the new minimum wage plan.”
On the government’s claim that it spent N1.65tn on capital expenditure in 2018, Gabriel Okeowo, BudgIT Principal Lead, assured that his organisation will ask for details of these expenditures for proper verification and public accountability.
For him, “while we wonder why other financing sources are not explained by the government, it is clear that Nigeria has a huge revenue problem and the current pace of recurrent expenditure growth (mainly salaries and debt servicing) is not sustainable.”