The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, on Thursday, sounded the alarm bells as she revealed that the country’s debt service cost in the first quarter (Q1) 2022 was N1.94 trillion, N310 billion higher than the actual revenue received during the period.
Also, Ahmed projected a total of N6.72 trillion as full-year budget for petrol subsidy payment in 2023, if the country decides to continue with the policy that had been identified as a drain on the economy. It also emerged yesterday that the federal government spent more to service debt in the first quarter (Q1) of 2022, than the actual revenue it earned during the same period.
The Minister of Finance disclosed these when she unveiled the Medium Expenditure and Fiscal Strategy Paper (MTEF-FSP) in Abuja. With debt service cost outstripping the country’s revenue, it is a clear indication of d@ngers ahead and policymakers must be more than willing to implement the much-needed reforms to save the economy.
She warned that urgent action is needed to address the nation’s revenue challenge and expenditure efficiency at both the national and sub-national levels.
Despite higher oil prices, the report showed that oil revenue underperformed due to significant oil production shortfalls such as shut-ins resulting from pipeline vandalism and crude oil theft as well as high petrol subsidy cost due to higher landing costs of imported products. However, non-oil taxes trailed targets marginally, with average performance of 92.6%.
“Revenue performance is expected to improve in the second half of 2022 as a result of concerted efforts to address the oil theft and pipeline vandalism, the report said. It added that there is also seasonality to some of the non-oil taxes, which means that the nation expects to collect significantly more in the second half of the year. The improved revenue collection should also moderate the Debt Service to Revenue ratio, which is currently above our target level,” the report said.
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