Amid a revenue squeeze, the Nigerian government will raise running costs by 40% to over N1 trillion

The Nigerian government will remove crippling debt servicing pressures and revenue generation constraints to spend 40% more on overheads next year when spending is expected to reach N1.1 trillion, according to the 2023 finance bill.

Nigeria's debt service is on track to more than double its revenue by the end of 2022, according to the World Bank's projection in its new Africa Pulse report, because what the government generates does not fails to stay at the level of the amount it needs to repay the debt.

By the nature of running costs, the N1.1 trillion covers day-to-day general expenses such as travel, rent, utilities, repairs and maintenance.

They will not take into account operating costs such as machinery, labor, materials, and other expenses often directly associated with providing services or producing.

In the document outlining his spending plan, President Muhammadu Buhari said, "We will further improve our business-enabling environment, accelerate ongoing revenue-based fiscal consolidation efforts, and strengthen our expenditure and debt", in order to ensure "fiscal sustainability". with no mention of cost cutting in the mix.

The government is setting aside 5 trillion naira for work, and 854.8 billion naira will help pay pensions, gratuities and other benefits to the elderly, the first 21.4% more than a year ago.

The spending plan titled "Fiscal Consolidation and Transition Budget" will put Nigeria on a historic budget deficit that will push the country 20.5% into debt, following the offer to borrow 8,800 billion naira for 2023 compared to the estimated N7 0.3 trillion for this year.

Fiscal consolidation, according to the Organization for Economic Co-operation and Development, involves "concrete policies aimed at reducing public deficits and debt accumulation".

“Generally, there is a need to control spending at all levels, especially in the recurrent area,” said Muda Yusuf, founder of the private sector participation advocacy group Center for the Advancement of Enterprise. private, which he also directs.

"It's not just overhead costs, even personnel costs, that we need to get under control. And the government doesn't seem to be doing much about that. They just find it convenient to go and borrow especially from the CBN to fill all these gaps,” Mr. Yusuf added.

As the financing gap climbs to 10.8 trillion naira, debt service for next year is expected to consume 6.3 trillion naira, a 70.3% year-on-year increase other.

“This (funding gap) represents 4.78% of estimated GDP, above the 3% threshold set by the 2007 Fiscal Responsibility Act,” the budget states.

The increases in overall overhead and recurrent expenditure come at a difficult time for Nigeria, which offered its honor as Africa's top oil producer to Angola in August, as the country is grappling with an oil theft that has blindsided the government for years. and sold out production.

In the seven months to July, the economy lost up to 4.3 trillion naira ($10 billion) due to the crisis, according to an earlier estimate by PREMIUM TIMES.

It excludes Nigeria from an oil boom that has allowed other producers to take advantage of runaway prices from a limited crude supply boosted by Russia's war with Ukraine.

It also echoes the idea that oil, for Nigeria, is not so much a blessing as it is a resource curse.

Last week, a four-kilometre-long clandestine oil pipeline was discovered in Delta State, after running undetected for nearly a decade, according to state oil company NNPC.

Reaching a new multi-decade low of 937,766 barrels per day (bpd), Nigeria's oil production for September fell 3.6%, official data showed on Monday.

It was more than half weaker than the a...