Under President Mohammadu Buhari’s leadership from 2015 to 2022, the Federal Government ran a deficit of N36.8 trillion in eight years.
77% of the deficit expenditure happened in the last four years, from 2019 to 2022, according to data on Federal Government finances from 2015 to 2022 provided by the Central Bank of Nigeria (CBN).
As the figures show, there was a discrepancy of N36.8 trillion in spending throughout the eight years between total revenues of N32.05 trillion and total expenditures of N68.8 trillion.
The government reported N13.9 trillion in revenue for the first four years, from 2015 to 2018, but spent N24.3 trillion instead, resulting in a N10.4 trillion deficit.
The deficit expenditure increased by 60% throughout the four years of President Buhari, from 2019 to 2022.
Revenue increased by 31% to N18.2 trillion over the previous four years, but spending increased by 83% to N44.5 trillion. As a result, deficit expenditure increased to N26.4 trillion, which is a 60% rise over the preceding four years.
Further research revealed that 2022 alone accounted for nearly 22% of the eight-year deficit during the tenure of President Buhari.
Revenue by the Federal Government increased throughout the year by 14.7% to N5.05 trillion from N4.4 trillion in 2021, while expenditures increased by 14.5% to N13.4 trillion in 2022 from N11.7 trillion in 2021.
As a result, the government ran up a deficit of N8.3 trillion, which is a 13.6% increase from N7.3 trillion in 2021.
Fuel Subsidy
The continuous and rapid rise in fuel subsidy spending, which reached N9.34 trillion in the eight years from 2015 to 2022, is a significant contributor to the jump in deficit spending.
Analysis revealed that annual fuel subsidy spending increased by 571 percent from N654 billion in 2015 to N4.39 trillion in 2022.
The Rising National Debt
Given that the N36.8 trillion deficit incurred throughout the eight-year period was financed by borrowing, the overall debt stock increased significantly by 267 percent or N33.65 trillion to N46.25 trillion in 2022 from N12.6 trillion in 2015, according to data from the Debt Management Office, DMO. This does not include the N23 trillion borrowed as Ways and Means from the CBN.
World Bank, IMF
The World Bank warned that unless the government moves on with the anticipated withdrawal of gasoline subsidies, the high debt stock and rising deficit expenditures would get worse, despite its recommendations for other economic stimulus measures.
The fiscal position deteriorated, according to the World Bank’s Macro Poverty Outlook for Nigeria: April 2023, which was published last month. The cost of the gasoline subsidy grew from 0.7% to 2.3% of GDP in 2022. Low non-oil revenue and high-interest rates exacerbated financial difficulties.
“The fiscal deficit was estimated at 5.0 percent of GDP in 2022, breaching the stipulated limit for a federal fiscal deficit of 3 percent.
“This has kept the public debt stock at over 38 of GDP and pushed the debt service to revenue ratio from 83.2 percent to 96.3 percent percent
“Fiscal and debt pressures will increase if the gasoline subsidy is not phased out in June 2023, as envisaged in the 2023 Budget.”
In a similar vein, the IMF’s Nigeria: 2022 Article IV Consultation noted that “directors underscored the need for substantial fiscal measures to provide needed policy space, put public debt on sound footing, and decrease risks.”
They encouraged the authorities to enhance carefully targeted social spending and to honour their pledge to terminate gasoline subsidies by the middle of 2023.
“It is also a priority to increase revenue collection, notably through tax administration changes, expanding the tax automation system, and boosting taxpayer segmentation.”