- FG to Spend N7.15trn on Debt Service, Recurrent Expenditure in 2020
The Federal Government would spend a total of N7.15 trillion on debt servicing and recurrent expenditure in the 2020 fiscal year, according to the Minister of Finance, Budget and National Planning, Zainab Ahmed.
Mrs. Zainab Ahmed, who unveiled the draft 2020-2022 Medium Term Fiscal Framework and Fiscal Strategy Paper on Tuesday in Abuja, disclosed this.
The N7.15 trillion translates to 73.7 percent of the planned 2020 budget of N9.78 trillion. Again, this highlighted Nigeria’s precarious situation when it comes to budget.
Africa’s largest economy would spend N2.05 trillion on capital expenditure in 2020 despite campaigning for economic diversification and pushing for improved productivity.
Still, the Federal Government plans to cut capital expenditure by N1.13 trillion from N3.18 trillion in 2019 to N2.05 in 2020. This explains why Nigeria has been unable to grow the non-oil sector in spite of its 91.2 percent contribution to real GDP.
According to the finance minister, N2.45 trillion would be spent on debt servicing in 2020, more than the estimated N2.05 trillion for capital expenditure while another N4.7 trillion would be splashed on recurrent expenditure (non-debt) for the same year, again twice N2.05 trillion planned budget for 2020 capital expenditure.
Nigeria’s budgeted ‘debt servicing cost’ to budget in the planned 2020 stands at 25.05 percent, slightly lower than the 25.59 percent achieved in 2019, largely due to the increase in the size of the planned 2020 budget.
The Federal Government budgeted N2.01 trillion for debt servicing in 2018; N2.26 trillion in 2019 and N2.45 trillion in 2020. Cost of servicing debt continues to rise as all efforts to ramp up revenue generation are yet to yield substantial result despite trillions reportedly spent on infrastructure to grow the economy.
Nigeria spent $357.26 million servicing foreign debt in the first quarter of the year, while the nation borrowed another N560 billion in the same quarter to push total debt to N24.9 trillion.
The inability of the Federal Government to aggressively push its diversification agenda due to high debt cost remains Nigeria’s growth obstacle, especially with the unemployment rate at 23.1 percent or 20.9 million of labour force. Nigeria needs to do more to curtail debt and improve capital expenditure.