Debt service costs have consumed about 74% of the federal government’s retained revenue in the first quarter of 2024.
This is according to the latest quarterly statistical bulletin from the Central Bank of Nigeria (CBN).
In Q1 2024, the federal government had a retained revenue of N1.76 trillion.
However, in the same period, debt servicing gulped N1.31 trillion, which is about 74% of the government revenue.
This figure highlights the continuing financial strain on the government’s resources as it grapples with significant debt obligations.
Although debt servicing gulped 74% of the federal government’s revenue, it was only about 29% of the total expenditures for the period under review.
While retained revenue was N1.76 trillion, an increase of 33.8% compared to the N1.32 trillion retained in the same period of 2023, there was a decrease in government expenditures by 12.9% from N5.28 trillion in Q1 2023 to N4.59 trillion by 2024.
Just as there was a decrease in expenditures, there was also a decrease in fiscal deficit by 29% from N3.96 trillion in the Q1 of last year to N2.83 trillion in the same period this year.
There was also a decrease in debt servicing spending by 33.5% from N1.97 trillion in Q1 2023, as debt servicing to revenue ratio was 149% in the first quarter of last year.
Although there was a reduction in the ratio this year, the high percentage still shows the critical challenge of managing the country’s debt in a sustainable manner, as substantial portions of the revenue are directed towards servicing existing debts rather than development projects.
The federal government spent more on debt servicing than it spent on personnel costs or capital expenditures.
Personnel costs for Q1 2024 amounted to N1.15 trillion, an increase of 17.1% from the N978.11 billion spent in the same period last year.
However, capital expenditure fell by 35.9% to N1.15 trillion in Q1 2024, from the N1.8 trillion recorded in the same quarter of 2023.
This reduction in capital expenditure is concerning, as it suggests a cutback in investments in infrastructure and other long-term development projects.
Capital expenditure is crucial for economic growth and development, and sustained reductions in this area could impede progress and affect the overall economic health of the nation.
