Direct funding of petrol subsidy by the Nigerian National Petroleum Corporation (NNPC) accounted for the shortfall in Federal Government revenue; it was learnt at the weekend.
The corporation was directly funding subsidy rather than remit into the federation account.
Director-General of the Debt Management Office (DMO) Ms. Patience Oniha, who reacted to reports that the government was spending more money to service debts, blamed the development on revenue underperformance.
She said: “If revenues were high with our low Debt to Gross Domestic Product (GDP) Ratio, Debt Service to Revenue Ratio would have been low.”
According to her, the high debt service to revenue explained government’s desire to increase revenue, notwithstanding the fact that government made provision for debt servicing in the annual budget and the Medium Term Expenditure Framework (MTEF).
Last Thursday, Finance Minister Zainab Ahmed alerted Nigerians to the dwindling revenue.
She said of the revenue paucity: “It is not feasible to make any provision for Ministries Departments and Agencies (MDAs’) capital expenditure in 2023 beyond multilateral/bilateral loan-funded and donor funded projects.”
The minister disclosed that between January and April, the federal government realised N1.67 trillion in revenue but spent N1.94 trillion on debt servicing debt with a debt to revenue of 119 per cent.
Taiwo Oyedele of PricewaterhouseCoopers (PwC) on his twitter handle said “this means the Federal Government revenue was insufficient to pay interest on debt. So, Federal Government borrowed even more to balance interest payment and of course also borrowed to pay salaries and other expenses”.
Another Twitter user, Dr Ødegaard lamented that “with $150 billion Total National Debt, Nigeria is Insolvent. The window for borrowing from the international market, is closing.
This was corroborated by the sub-optimal interest shown for Nigeria bond at the last auction.
To improve revenue, he canvassed for fuel subsidy removal; increase in Value Added Tax (VAT) from 7.5 per cent to 10 per cent; removal of forex subsidy and allow the Naira to trade at its value and focus on exports that will earn us revenue.
Other revenue improving measures include: removal of electricity subsidy; granting universities and polytechnics autonomy “and wean ASUU and other staff salaries off the Federal Government books; right size the civil service and freeze employment for a while and use the savings to augment the minimum wage and provide welfare cushions.”
He also canvassed the scrapping of the Senate and retention of the Green Chamber, select ministers from the House of Representatives and drop the idea of ministerial positions; toll the roads and pursue Private –Public-Partnership (PPP) for capital projects; allow states to take ownership of their mining/extractive industries and let every state develop at its own pace and cede policing to the states.