Nigeria Broke As Debt Payment Exceeds Income

Nigeria’s fiscal position worsened in the first four months of the year as the cost of servicing debt exceeded government revenue in the first quarter of 2022. According to the details of the 2022 fiscal performance report from January to April, Nigeria’s total revenue was 1.63 trillion naira while debt service was 1.94 trillion naira, showing a variation of more than 300 billion naira. Minister of Finance, Budget and National Planning of Nigeria, zainab ahmedwarned on Thursday that urgent action is needed to address the challenge of the nation’s revenue and spending efficiency at both the national and sub-national levels. The report showed that the oil and gas federation’s gross receipts for the first four months of the year were projected at 3.12 trillion naira, but as of April 30, only 1.23 trillion naira were earned, representing a yield of 39%. Despite higher oil prices, the report showed that oil revenues underperformed due to significant shortfalls in oil production, such as shutdowns resulting from pipeline vandalism and crude oil theft, as well as high cost of gasoline subsidies due to higher landing costs of imported products. However, non-oil taxes fell marginally behind targets, performing 92.6% on average. “Revenue performance is expected to improve in the second half of 2022 as a result of concerted efforts to address oil theft and pipeline vandalism, according to the report. He added that there is also seasonality in some of the non-oil taxes, meaning the nation expects to collect significantly more in the second half of the year. “Improving revenue collection should also moderate the debt service-to-revenue ratio, which is currently above our target level,” the report says. The expectation of better revenue collection should also moderate the debt service to revenue ratio, which is currently above the nation’s target level. Preceding In the first quarter of 2020, Nigeria’s debt service as a percentage of revenue increased to 99%, according to the Medium-Term Expenditure Framework and Fiscal Strategy (MTEF/FSP) report released by the Federal Ministry of Finance, Budget and National Planning. . The data showed that in the first quarter of 2020, Nigeria incurred a total sum of N943.12 billion in debt service, while the Nigerian government retained revenue of N950.56 billion. Indeed, Nigeria’s debt service to income was estimated to be 99% over the period. On Thursday, the new report showed that the Nigerian government’s share of oil revenue in the first quarter of 2022 was N285.38 billion (representing a 39 percent return), while non-oil tax revenue they totaled N632.56 billion, accounting for 84 percent. In essence, the government generated N401.8 billion from corporate income tax (CIT) and value added tax (VAT), as CIT and VAT collections were N298.83 billion and N102.97 billion, respectively, representing 99 percent and 98 percent of their respective targets. Customs receipts (composed of import duties, excise duties and fees, as well as special levies from the federation account) fell short of the target by N76.77 billion (25.42 percent), while other receipts amounted to 664.64 billion naira, of which stand-alone income was 394 naira. 09 billion. underlying factors The report noted that for Nigeria, “fiscal risks are somewhat elevated,” following weaker-than-expected domestic economic performance and structural problems in the national economy. He warned that revenue generation remains the nation’s main fiscal constraint and that the systemic problem of resource mobilization has been exacerbated by recent economic downturns. Underlying factors also include the war between Russia and Ukraine, which the report says has taken on a new and worrying dimension with serious implications for food and energy prices. He listed the resurgence of COVID -19 in some major economies, which has led to the slowdown in economic activities in those countries; as well as renewed high inflation in most economies, causing monetary tightening in these economies with the inherent negative impact on capital inflows to emerging market economies. The challenging national macroeconomic and business environment and the negative impact of insecurity on the national economy were also identified as a contributing factor. “However, efforts will focus on improving tax administration and collection efficiency,” the report says. “Crude oil production challenges and PMS subsidy deductions by NNPC pose a significant threat to achieving our revenue growth targets, as seen in the 2022 Performance to April. “Bold, decisive and urgent action is urgently required to address underperformance of revenue and spending efficiency at the national and sub-national levels.” Read More Related News Here Let here it in the comment below if you do have an opinion on this; Nigeria Broke As Debt Payment Exceeds Income