Stakeholders worried about N1.8tr debt service in 2017
Budget office hides approved MTEF 2017-2019
Again, the rising cost of debt for the country’s economy, for the third consecutive time, emerged the top three allocations in the national budget, taking a chunk of N1.8 trillion.
By the end of 2017 fiscal year, Nigeria would have spent N4.2 trillion on debt servicing, as in 2015, it provided N943 billion, which rose by over 50 per cent to N1.48 trillion in 2016 and now at N1.8 trillion.
The debt service provision is the third largest component of the 2017 fiscal plan, representing 24.7 per cent or approximately a quarter of the entire budget at N7.4 trillion and 36 per cent of estimated revenue.
In the last three years, the government had a budget of about N18 trillion, out of which debt service provision alone took an average of 23 per cent, more than one-fifth of the total figure, leaving N13.8 trillion for recurrent and capital expenditures.
Former Governor of the Central Bank of Nigeria, Prof. Chukwuma Soludo, described the situation as a broken fiscal regime, a system noted for its total recurrent expenditure being more than revenue, meaning that the country borrows to finance consumption.
“Now we are having debt service to current revenue at 66 per cent. This is ridiculous and we are heading to nowhere. We need to fix the broken pipe, that is, the revenue has to go up. Of course tax collection and blockage of leakages are important,” he said.
A fiscal governance campaigner, Eze Onyekepere, said dedicating 24.73 per cent of the overall budget to debt service is an indication that Nigeria’s debt profile is becoming unsustainable.
“The capital vote of 29.30 percent is just a little higher than debt service. With a deficit financing of N2.35 trilion, the debt service is about 36 per cent of our expected revenue. This shows that we may soon be back to the debt situation pre debt relief period,” he said.
A further breakdown of the figures showed the debt service compared to capital allocation of 10 key ministries shows the opportunity costs of servicing debts.
“The capital allocation to 10 key ministries as a percentage of debt service is 72.99 per cent, while debt service is 84.49 per cent of the overall capital vote,” Onyekpere said.
The approved budget is a sum of N7.44 trillion, N143 billion higher than the estimates submitted by the President and N1.38 trillion higher than the sum approved in the 2016, representing 22.76 per cent increase.
Still, the budget has received knocks in other areas of human development index, as it ignored the constitutional provision of section 11 of the National Health Act (NHA), which provided one per cent of the Consolidated Revenue Fund for Basic Health Care Provision Fund.
“The provision should have been in the sum of N47.59 billion. The conspiracy of the executive and legislative arms of government in refusing to implement the clear provision of the NHA stands condemned.
“It is an act of callous insensitivity to the plight of poor Nigerians, particularly women and children, whose rights to life and health are violated on a daily basis because the government sees them as expendable persons,” Fidelis Onyejegbu of Public Finance Management Unit at CSJ, said.
Meanwhile, the Budget Office of the Federation has failed to publish the approved Medium Term Expenditure Framework (MTEF) 2017-2019, upon which the 2017 estimates are extracted.
The move, which worsens Nigeria’s Budget Transparency rating among the global community, comes as a regret because the public, particularly the civil society groups will not be equipped for consequent budget monitoring.
“The MTEF on its website is the executive proposal, which was amended by the legislature. Information about the revenue estimates available to the public has only been picked from the media. The right to access to information demands that this all important document should be available to all Nigerians,” a lawyer, Kingsley Nnajiaka, noted.