In a striking revelation by BudgIT, a leading civic tech organization, the financial state of Nigeria’s Federal Government in 2023 highlights a deepening reliance on borrowing to cover mounting expenses.
The report reveals a troubling fiscal trajectory, with the government’s spending far outstripping its revenue, raising alarm bells about the sustainability of the nation’s finances.
According to BudgIT’s analysis of the 2023 Fiscal Accounts Report from the Accountant General of the Federation, Nigeria generated N5.99 trillion in revenue while spending ballooned to N19.50 trillion. This massive spending spree left the government with a staggering deficit of N13.5 trillion—more than double the revenue generated.
The figures underscore a concerning trend: Nigeria’s debt servicing now consumes a disproportionately large share of the federal budget. Out of the total expenditure, N8.56 trillion, representing 43.9%, was allocated to servicing the country’s growing debt.
In stark contrast, capital expenditure, essential for long-term economic growth and infrastructure development, received a meager N4.49 trillion, highlighting the skewed priorities driven by the need to manage existing debts.
This financial imbalance raises critical questions about Nigeria’s fiscal responsibility and long-term economic health. The heavy reliance on borrowing not only places a strain on the nation’s resources but also diverts funds away from vital projects that could improve the living standards of ordinary Nigerians.
Instead of investing in infrastructure, healthcare, and education, the government is increasingly trapped in a cycle of borrowing to pay off old debts, leaving little room for growth or development.
Former President Muhammadu Buhari, who handed over power to President Bola Tinubu on May 29, 2023, left behind a fiscal landscape fraught with challenges. As the current administration grapples with these inherited economic hurdles, the need for comprehensive reforms in revenue generation and fiscal management has never been more urgent.
BudgIT’s report also highlights the inadequacy of the government’s revenue streams. The Federation Account Allocation Committee (FAAC) contributed N3.80 trillion, while the federal government’s independent revenue amounted to N1.98 trillion. These figures suggest a structural weakness in the government’s ability to generate sufficient income to meet its obligations, exacerbating the dependency on borrowing.
The situation has sparked a broader debate on the need for fiscal discipline and innovative approaches to revenue generation. Economists and financial experts are calling for a rethinking of Nigeria’s economic strategy, advocating for measures that would reduce the debt burden while boosting revenue through diversification and improved tax collection.
As Nigeria continues to struggle with balancing its books, the long-term consequences of unchecked borrowing loom large. Without decisive action, the country risks falling deeper into debt, with far-reaching implications for future generations.
The BudgIT report serves as a stark reminder that the path to economic stability requires not just borrowing but also significant reforms in governance and fiscal policy.