FG retained revenue climbs to N1.76trn in Q1 2024

Debt service costs consumed about 74 percent of the federal government’s retained revenue in the first quarter of 2024, according to the latest quarterly statistical bulletin from the Central Bank of Nigeria (CBN).

During this period, the federal government retained N1.76 trillion in revenue, with N1.31 trillion allocated to debt servicing.

This significant expenditure on debt servicing underscores the ongoing financial strain on the government’s resources due to substantial debt obligations.

Despite a 33.8 percent increase in retained revenue compared to N1.32 trillion in the first quarter of 2023, government expenditures decreased by 12.9 percent, from N5.28 trillion in the first quarter of 2023 to N4.59 trillion in the first quarter of 2024.

The fiscal deficit also decreased by 29 percent, from N3.96 trillion in the first quarter of 2023 to N2.83 trillion in the first quarter of 2024.

Debt servicing expenditure decreased by 33.5 percent, from N1.97 trillion in the first quarter of 2023, when the debt servicing to revenue ratio was 149 percent.

In the first quarter of 2024, the federal government spent more on debt servicing than on personnel costs or capital expenditures. Personnel costs amounted to N1.15 trillion, a 17.1 percent increase from N978.11 billion in the same period last year.

However, capital expenditure fell by 35.9 percent, from N1.8 trillion in the first quarter of 2023 to N1.15 trillion in the first quarter of 2024. This reduction in capital expenditure raises concerns about investments in infrastructure and long-term development projects, which are crucial for economic growth.

Data from the CBN shows that out of the $1.61 billion in total outflows during this period, $1.12 billion was directed towards servicing external debt, a significant increase from 49 percent in the first quarter of 2023.

Indermit Gill, the World Bank’s Chief Economist and Senior Vice President, highlighted the potential for a widespread financial crisis without immediate and coordinated action.

The growing debt burden limits the government’s ability to allocate funds for critical development projects and public services, posing significant challenges to sustainable economic growth and stability.