Debt servicing cost Nigeria N2.02tn, as court judgement may dwindle revenue

In the first half of 2021, debt servicing has gulped N2.02 trillion, according to the Minister of Finance, Zaina Ahmed who spoke at a committee interactive session in Abuja on Monday.

Ahmed said the Federal Government spent the amount between January to June as the country’s total public debt rises to N33.11 trillion at the end of H1 this year.

Debt servicing dwindling Nigeria’s revenue

The debt profile of Africa’s largest economy rose from N32.2 trillion in February 2021. As the debt rises, Nigeria’s debt servicing has been eating into the country’s revenue.

Last year, for every N100 generated by FG, it spent N97 to service debts, as the latter gulped N3.34 trillion out of the total revenue of N3.42 trillion recorded as turnover.

As of June 2021, Ahmed stated that the Federal Government was able to retain 67.3 percent of its revenue target with the debt servicing standing at N2.02 trillion.

She gave this update during the 2022-2024 medium-term expenditure framework/fiscal strategy paper (MTEF/FSP) committee interactive session.

Nigeria remains dependent on oil revenue

In her presentation to the committee, Ahmed noted that oil revenue accounted for N492.44 billion in the first six months of 2021, while the non-oil revenue totalled N778.18 trillion.

Read also: Nigerian govt spends N1.57trn on debt servicing in 6 months

She revealed that companies income tax (CIT) and value-added tax (VAT) collections have surpassed budget targets, News Agency of Nigeria reported.

CIT and VAT generated N397.02 billion and N129 billion respectively.

VAT revenue threatened by court judgement

Ripples Nigeria had previously reported that the revenue generated from VAT by the Federal Government agency, Federal Inland Revenue Service (FIRS) might dwindle in the coming months.

A court decision in Rivers State, by Justice Stephen Pam, had ordered the FIRS to desist from demanding and collecting sales taxes and other non-import VAT.

The judge ruled that only states are empowered by the Concurrent Legislative List to make such request of its residents and not the FIRS.

As the federal government has moved to appeal the judgment, findings show that Justice Pam’s ruling, if not overturned, will cost FIRS over N1.64 trillion yearly.

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