FG releases a breakdown of budget performance in first 6 months of 2021 as debt servicing gulps 88% of revenue

• From January to June, Nigeria spent N2.02 trillion to service matured debt despite weak revenue recorded
• This means that a significant percentage of Nigeria's budget was financed using borrowed funds.
• Despite this, the federal government has continued to defend its borrowing plan, noting that it is necessary for the country's infrastructure development.

The federal government has again revealed that a significant portion of its revenue in the first six months of 2021 went into paying for matured debt.

This was contained in the 2021 Second Quarter and Half Year Budget Implementation Report obtained by legit.ng on Wednesday.

According to the report, N2.31 trillion in the first half of the year was released for budget implementation, with N2.02 trillion of that amount going to debt servicing.

This means that for every N100 issued by the federal government to finance the budget, N88 was spent on debt repayment, forcing the government to rely significantly on borrowed funds to pay workers and other expenses.

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Here is a breakdown of key economic metrics captured in the report.

Revenue

According to the report, a total of N3.38 trillion was earned in the first half 2021 of which N1.66 trillion was earned in the first quarter, while 1.71 trillion was recorded in the second quarter

Breakdown of the sources of revenue shows in the first half of the year, Nigeria made N1.89 trillion from oil, while non-oil revenue was N2.45 trillion.

However, only the sum of N2.31 billion was received to fund the FGN budget in the first half of 2021.

Expenditure

Total expenditure of the Federal Government stood at N5.80 trillion in the first half of 2021 representing N42.24 billion (0.73 percent) increase above the N5.76 trillion prorate budget projection for the review period.

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Breakdown shows a total of N2.23 trillion was spent on non-debt recurrent expenditure in the first half of 2021 representing a decrease of N586.93 billion (20.81 percent) below the budget estimate of N2.82 trillion for the period.

It was however above the non-debt recurrent expenditure of N2.16 trillion spent during the half-year of 2020 by N68.78 billion (3.18 percent). Statutory Transfers amounted to N248.26 billion during the review period.

Debt

According to the report, the total public debt stock as at 30th June, 2021 stood at N35,46 trillion (US$86,571.80 million).

This represents an increase of N2.35 trillion (7.12percent) when compared to the N33.10 trillion reported at the end of March 2021.

The breakdown from the report shows N21.75 trillion is domestic debts while the balance of N13.71 trillion is for external domestic debt.

Debt serving

For debt servicing as earlier stated, in the first half of 2021 N2.02 trillion was spent on paying for matured debts. The sum is higher than the prorated sum of N1.66trillion.

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Out of the amount paid, the federal government paid N587.56 billion to CBN as interest for money borrowed through Ways and Means.

While. the sum of N935.46 billion was used for domestic debt servicing and N497.15 billion was spent on external debt servicing during the period under review.

Fiscal Performance

Nigeria recorded a fiscal deficit of N3.48 trillion in the first half of 2021.

This was N1.03trillion (42.46 percent) above the projected half-year deficit of N2.44 trillion. It was also, above the N2.80 trillion deficit that was recorded in the first half of 2020.

The report showed the deficit was financed through domestic borrowing of N1.25 trillion thereby reflecting negative net financing of N2.23 trillion in the period under review

What I told Buhari about borrowings - Lawan

In other news, Ahmad Lawan, president of the Senate, has advised President Buhari to reduce the external borrowings being incurred to fund the country’s annual budgets.

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Nigerian government spends N41.9 billion on debt servicing in January alone

The principal lawmaker advised the president to, instead, focus on blocking financial leakages and avoiding wastage in all tiers of government.

Legit.ng gathers that Lawan said this on Monday, August 23, in Abuja, after a closed-door meeting with President Buhari at the State House.

Source: Legit.ng