A report from the World Bank has shown that for the first time, the Federal Government’s spending on personnel costs and debt servicing in 2022 exceeded its total revenue.
The Punch reported that this information was revealed in the Nigeria Development Update for June 2023.
During the time period under study, the Federal Government used 102% of its revenue to pay for salaries and interest.
The Washington-based bank continued by saying that as a result, capital expenditure spending dropped.
According to the research, spending quality declined as a result of funding restrictions and rising debt. Overall, spending has become more rigid, reducing the amount of money available for the discretionary spending required to achieve development goals.
“Personnel costs and interest payments make up an increasing percentage of total general government expenditures (59 percent in 2022) and, for the first time, exceeded total government revenues (102%) in 2022.”
According to data received from the Federal Government’s budget implementation report, the amount planned for personnel expenses has climbed from N2.29 trillion in 2019 to N4.11 trillion in 2022.
This marked a considerable increase in recurrent expenses of N1.82 trillion or 79.48 percent in just three years.
Also, data from the Debt Management Office showed that Nigeria’s debt payment costs increased by 14.68% to N3.36 trillion in 2022.
According to DMO, payments for servicing both domestic and foreign debt totaled N2.93 trillion in 2021.
However, in just three months, the cost of repaying Nigeria’s debt climbed by 55.71 percent, to N1.24 trillion, and between October and December 2022, the country spent N406.77bn on domestic debt servicing, and $312.27m (N143.74bn) on external debt servicing, making a total of N550.51bn.
Between January and March 2023, Nigeria spent N874.13 billion on domestic debt servicing and $801.36 billion (N368.87 billion) on overseas debt payments, totaling N1.24 trillion.
The external debt servicing was done using the DMO’s exchange rate of $1=N460.3.
