The 2021 budget implementation report reported that the federal government spent a total of N1.8tn on debt servicing in the first five months of the year representing about 98% of the total revenue generated in the same period.
A look at the data revealed that the total aggregate revenue generated by the federal government between January and May 2021 stood at N1.84tn, representing a shortfall of N1.48tn compared to the expected revenue of N3.32tn.
A Debt Management Office (DMO) report in Mar-21 revealed that the country’s debt increased by 0.61% to N33.1tn from N32.9tn in Dec-20.
This means Nigeria grew its debt burden by N191bn in the first three months of the year amidst dwindling revenue and devaluations in the Nigerian economy.
The cut in Nigeria’s oil production quota has also significantly affected Nigeria’s revenue. The nation currently maintains a crude oil production of 1.4mbpd despite a production capacity of 2.5mbpd.
The Nigerian government’s increase in debt service to revenue ratio at c.98% indicates that the country is spending practically all its revenue on servicing debts.
This could potentially lead to a deepening crisis considering the need for the country to service its CAPEX projects to solve its infrastructure needs.
The recent positive rally in the global oil market has not yielded substantial growth in government revenue due to Nigeria’s reduced production quota.
Notably, according to the foreign trade report by the NBS, the value of crude oil export reduced to N1.9tn in Q1-21 from N2.52tn recorded in the previous quarter.