Brace Up, No Capital Projects In 2023 – FG Alerts Nigerians
- As debt servicing bites harder
BY COBHAM NSA – Going by its dwindling revenue profile, the possibility of funding capital projects in the 2023 budget is daily presenting quite a worrying scenario, according to the Federal Government’s projection.
This is the hugely disturbing picture painted by the Minister of Finance, Budget, and National Planning, Mrs Zainab Ahmed even as the Debt Management Office (DMO) laments that the government is spending more money to service debts due to underperformance in the revenue side of the 2022 budget.
In alerting Nigerians of the precarious revenue situation, Mrs Ahmed said during the 2023 – 2025 Medium Term Expenditure Framework and Fiscal Strategic Paper (MTEF and FSP) Public Consultation in Abuja that the revenue paucity is biting in the present circumstances and the government is looking at all areas to address the challenging situation.
According to her; “It is not feasible to make any provision for Ministries Departments and Agencies (MDAs) capital expenditure in 2023 beyond multilateral/bilateral loan-funded and donor funded projects.”
To explain the situation further, the Finance Minister said between January and April, the Federal Government realised N1.67 trillion in revenue but spent N1.94 trillion on debt servicing debt with a debt to revenue of 119 percent.
Mrs Ahmed, who dropped hints on the forward-looking intentions of the Federal Government, also stated that; “there will be tighter enforcement of the performance management framework for Government-Owned Enterprises (GOEs) that will significantly increase operating surplus/dividend remittances in 2023”.
On the implications for net accretion to the Federation Account and projected deficit levels, the Minister lamented that the cost of debt servicing for the first four months of the current year, 2022, exceeded revenue earned.
With fears that in the circumstance, less than one trillion Naira might be available for capital expenditure next year, the Director-General of the Debt Management Office (DMO) Ms. Patience Oniha, attributed the unhealthy development to poor revenue accruals has refused to ebb.
Oniha said; “If revenues were high with our low Debt to Gross Domestic Product (GDP) Ratio, Debt Service to Revenue Ratio would have been low”, stressing that the high debt service to revenue explained the government’s desire to increase revenue.
She said this challenging situation arose despite the fact that the government made provisions for debt servicing in the annual budget and the Medium Term Expenditure Framework (MTEF).
