The federal government expended the sum of N1.6 trillion on debt servicing in the first six months of the year, according to Mr Clement Agba, the Minister of State for Budget and National Planning.
The Special Assistant to the Minister on Media, Mr Ojeifo Sufuyan, noted that also, the sum of N1.61 trillion was used on personnel cost, including pensions from January through June.
He further said as of the end of June 2020, only N444.8 billion out of the N9.9 trillion appropriated for the year, had been released for capital expenditure, largely due to the budget revision exercise.
However, he disclosed that the figure hit N1 trillion in the seventh month of the year.
Nigeria’s debt service to revenue ratio is 99 per cent due to the headwinds of the coronavirus pandemic which further worsened the country’s debt servicing eroding other plans for capital projects and infrastructural growth.
The minister said, “Crude oil prices declined sharply in the world market, with Bonny Light crude oil price dropping from a peak of $72.2 per barrel on January 7, 2020, to below $20 per barrel in April 2020.
“In effect, the $57 crude oil price benchmark on which the 2020 budget was based became unsustainable.
“Another key development in the international crude oil market is the massive output cut by OPEC and its allies (OPEC+) to stabilise the world oil market, with Nigeria contributing about 300,000 barrels per day of production cuts.”
Mr Agba added that, “The impact of these developments is about 65 per cent decline in projected net 2020 government revenues from the oil and gas sector, with adverse consequences for foreign exchange inflows into the economy.”
With 55.7 per cent of Nigerians either unemployed or underemployed, this will further pose a problem with plans to address revenue shortage and drive growth across key may prove hard to implement.
Combined with inflation at 12.82 per cent and a recession looming, analysts note that the next six months will be bleak.
