Wednesday , December 1 2021
Debt Servicing Gulps N1.8 Trillion in Five Months - FG

Debt Servicing Gulps N1.8 Trillion in Five Months – FG

The Federal Government says it released N973.13bn for the implementation of capital projects contained in the 2021 budget between January and May. It also disclosed that debt servicing gulped N1.8tn within the same timeframe.

The Minister of Finance, Budget and National Planning, Zainab Ahmed, disclosed these at the presentation of the draft for 2022-2024 Medium Term Expenditure Framework and Fiscal Strategy Paper in Abuja on Thursday.

According to the minister, as of May, the Federal Government had spent 92.7 per cent of the prorated budget, which amounted to N4.8tn.

Out of this amount, N1.8tn was released for debt servicing, which represented 37 per cent of expenditure; N1.5tn was spent on personnel cost, including pensions while N973.13bn was spent on capital projects.

The MTEF/FSP is the government’s pre-budget statement which is usually taken into consideration during the preparation of the budget estimates for Ministries, Departments and Agencies.

The MTEF/FSP presents the development priorities of the Federal Government for the period covered.

The minister also disclosed that the government would spend N900bn on petrol subsidy in 2022.

In response to a question posed on petrol subsidy, Ahmed stated that the amount currently spent on subsidizing PMS could be redirected to more productive sectors of the economy such as health, education and infrastructure.

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Ahmed said, “This is costing us big time. We are spending over N150bn on subsidy. That means NNPC has to use that amount of money to pay for PMS and distributing it. That is money that the federation account can share.

“This is money that could have been available for education, health and infrastructure. reduce our borrowing, increase the amounts that states and local governments are collecting.

“We are being penny wise pound foolish to think that by giving this subsidy, that citizens are benefitting. But by the end of the day, the citizens are actually the ones that are carrying the brunt of the wealthy.”

She added that there was need to completely remove the subsidy on fuel as the subsidy was only benefiting the rich.

She said, “We are projecting we’ll be paying at least N900bn subsidy next year.

“Imagine what we could have done with that amount. How many schools you can build, how many health centres. It is not wise; it is not wise because we are hurting our economy.”

A review of the 2022 Federal Government spending showed that the projected subsidy budget of N900bn is higher than the N261.2bn budgeted for overhead costs for Government Owned Enterprises; N567.02bn for pension, gratuities and retirees; and N366.13bn capital supplementation budget.

It also exceeds the N292.7bn for sinking fund, N750.03bn personnel cost for Government Owned Enterprises, and N335bn overhead cost.

About Bukola Olanrewaju

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