Unfortunately, bureaucrats and public office holders do not want to bite the bullet even in the face of dwindling public fortune. 7 trillion for selfish interests. As the year drew to an end last year, ministries, departments and agencies (MDAs) engaged in activities, including retreats, workshops and seminars, considered by many as frivolous as they were under pressure to deflate unspent allocation ahead of new budget approval. Tella said this behaviour is a major leakage the country must deal with to enhance probity in public office and strengthen fiscal stability.
While debt servicing is rising and increasingly sapping the entire retained revenues of the government, incomes are falling. For instance, a total of N3.42 trillion, N1.4 trillion (41.2 per cent) oil revenue and N2 trillion (58.8 per cent) non-oil revenue, was received to fund the 2020 budget. The amount received was N1.9 billion or 36 per cent short of the amount contained in the year’s amended annual revenue estimate and N701.8 billion (17 per cent) less than the N4.1 trillion recorded in 2019.
Add to this complication is the fiscal deficit, which is rising at an alarming magnitude. The Federal Government recorded an all-time high fiscal deficit of N6.6 trillion in 2020 – an equivalent of 14.2 per cent of the 2020 GDP. The amount was also N2 trillion, which is 43.2 per cent, higher than the projected N4.6 higher and 57 per cent above the 2019 deficit. The shortfall was partly financed through domestic borrowing to the tune of N2 trillion.
A senior fellow at the Global Governance Institute, Brussels, Belgium, and ex-Nigerian diplomat, Ejeviome Otobo, said “Nigeria needs major reform to up its taxes from its current seven per cent to GDP to catch up with the rest of African countries, which averages 18 per cent.”
The advisories have underscored historical overreliance on unstable oil incomes, and the tendency towards borrowing when there are shocks. In a policy document on Nigeria, the IMF said major tax reform was critical and inevitable as the country looks forward to a resilient recovery.
Currently Nigeria’s per capita public debt, the current officially declared debt translates to N190, 300, which is 53 per cent or over half of yearly minimum earning of a civil servant. This amount is the nominal amount the government has incurred on behalf of every Nigerian, including 23 million unemployed citizens. But Okonjo-Iweala had said that the real cost of Nigeria’s rising public debt is the inability of the country to fund projects that could positively affect the socio-economic life of an average citizen.
Amid disturbing and growing debt burden, the government contemplates total fresh loans of over N15 trillion in the 2022 – 2024 Medium-Term Expenditure Framework/Fiscal Stability Paper (MTEF/FSP)
Already, N6.25 trillion, or approximately 3.39 per cent of the GDP was captured in the original 2022 budget. The amount is slightly above the three per cent ceiling prescribed in the Fiscal Responsibility Act of 2007 (FRA). The huge shortfall, which Adonri, an economist and stockbroker, said is driven by the desire for big government, is to be funded with fresh borrowings and privatization.
With the appropriation raised by 4.5 per cent, from trillion to trillion, the estimated fiscal deficit would have https://cashcentralpaydayloans.com/payday-loans-ks/ also adjusted upward. In 2018, an estimated deficit of 1.95 trillion almost doubled at the end of the fiscal year to N3.64 trillion. That has been the trend in recent years, with much of the shortfall being financed by a supposedly temporary window offered by WMF.
The World Bank and the International Monetary Fund (IMF) have severally described the country’s tax as paltry considering its economic potential
Successive administrations have bandied low debt-to-GDP ratio as a licence to borrow more. Interestingly, the government falls back to revenue, not GDP, to service or amortise debt instruments. Agriculture contributes over 20 per cent to the country’s nominal GDP. Sadly, the mainstay of the country’s revenue is neither agriculture nor manufacturing but oil, which contributes less than 10 per cent of the national output.
“Government should also align the cost of governance with the economic realities. We cannot continue to run a bogus structure while we continue to borrow money. In delivering infrastructure, we can also explore public private partnerships (PPP); that is for essential infrastructure. In reality, we can do without some of the infrastructure till when the economy improves and we have the capacity to execute them,” Tella said.