The federal government has spent N1.31 trillion out of N1.76 trillion retained revenue in the first quarter of 2024 on debt servicing, according to the latest quarterly statistical bulletin from the Central Bank of Nigeria (CBN).
In Q1 2024, the federal government retained revenue of N1.76 trillion, but a significant portion, N1.31 trillion or approximately 74%, was allocated to debt servicing. This figure underscores the ongoing financial strain on the government’s resources due to substantial debt obligations.
Although debt servicing accounted for 74% of the federal government’s revenue, it represented only about 29% of the total expenditures for the reviewed period.
The retained revenue of N1.76 trillion marks a 33.8% increase compared to N1.32 trillion in the same period of 2023. Concurrently, government expenditures decreased by 12.9%, from N5.28 trillion in Q1 2023 to N4.59 trillion in 2024.
Additionally, there was a 29% reduction in the fiscal deficit, from N3.96 trillion in Q1 2023 to N2.83 trillion this year. Debt servicing costs also fell by 33.5% from N1.97 trillion in Q1 2023, with the debt servicing to revenue ratio dropping from 149% last year to the current 74%.
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Despite the reduction, the high percentage of revenue directed towards debt servicing remains a critical challenge for managing the country’s debt sustainably. Large portions of revenue continue to go towards servicing existing debts rather than funding development projects.
The federal government’s spending on debt servicing surpassed its expenditures on personnel costs or capital expenditures. Personnel costs for Q1 2024 amounted to N1.15 trillion, a 17.1% increase from N978.11 billion in the same period last year. However, capital expenditure dropped by 35.9%, from N1.8 trillion in Q1 2023 to N1.15 trillion in Q1 2024.
This reduction in capital expenditure is concerning, as it indicates 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.
