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  • Business - Economy
  • Updated: August 19, 2020

Nigeria Fail To Meet H1 Projected Revenue, As Debt Wipe Off 97.5 Percent

Nigeria Fail To Meet H1 Projected Revenue, As Debt Wipe Off

In the first and second quarter combined, 97.5 percent of the revenue generated by Nigeria was spent on debt servicing by the Federal Government. This further reveals the extent of Nigeria's revenue and debt problem. The country has been struggling to grow its revenue since the outbreak of COVID-19 in Nigeria in late February 2020 and the eventual lockdown.

AllNews gathered that a larger percentage of the revenue generated in the first five months was disbursed to pay off debt. Within the period, Nigeria recorded N1.62 trillion as revenue, but debt servicing gulped N1.58 trillion, leaving Nigeria with about 2 percent of the revenue.

It had been previously reported that Nigeria spent N0.96 kobo of every N1 it made fund debt servicing in the first quarter. However, despite the level of revenue Nigeria uses to repay debt, the Finance Minister, Zainab Ahmed, has insisted that the country has revenue issues and not debt.

Nigeria Fail To Achieve Projected Revenue For H1 2020

In the recent development, Nigeria's budget office disclosed that out of the N2.62 trillion projected for the first five months, the country was only able to generate N1.62 trillion as total revenue.  But within the period, N3.98 trillion was spent by the Nigerian government.

While breaking down the government's spending rate, it was revealed that non-debt recurrent expenditure, including salaries, pensions, and overheads gulped N1.79 trillion, while N378.85 billion was released for capital expenditure.

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Further breakdown showed that oil revenue contributed N701.6 billion, while N439.32 billion was generated from non-oil tax revenues. Companies' income tax recorded a total of N213.24 billion in revenue, value-added tax accounted for N68.09 billion revenue, and Customs collection generated N158 billion - all within the period under review.

Note that Nigeria has revised its 2020 budget to N10.8 trillion 2020, and this comes with a N4.98 trillion deficit which AllNews reported would be balanced with domestic and international creditors.

Other Loans FG Is Depending On

FG is depending heavily on loans to fund the Economic Sustainability Plan. Nigeria is expecting $1.5 billion from the World Bank this year. Although the approval of the fund has been delayed due to Nigeria's economic reform and the delayed meeting of the World Bank's board of directors.

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FG said it is seeking about $7 billion, and financial sources listed by the government include the $3.4 billion received from the International Monetary Fund (IMF), $1 billion from the African Development Bank (AfDB), the African bank also issued $288.5 million COVID-19 loans to Nigeria. The government also stated that it will draw $150 million from the Nigeria Sovereign Investment Authority (NSIA).

The IMF has already approved the $3.4 billion after Nigeria requested 100% of its entitlement in IMF. These series of loans have increased the debt burden of the country, with debt service to revenue ratio causing Nigeria to use almost all its revenue to service loan, meaning, Nigeria uses about 96 kobo out of N1 to service debt in the first quarter.

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