Details in the final copy of the 2022 budget of the country have shown that over 22 per cent will be spent on debt servicing.
In the approved budget, a total of N17.1 trillion was approved in the final budget. Of this figure, N6.9 trillion is budgeted for Recurrent expenditure, N5.4 trillion is budgeted for capital expenditure while N3.8 trillion will be spent on debt servicing.
The breakdown shows that domestic debts servicing will gulp N2.5 trillion, foreign debts will take N1.1 trillion, N2.70 billion will be spent on sinking funds for loans. A Sinking Fund is set aside to pay off a debt or bond in the lead up to a bond’s maturity.
Nigeria’s Many Challenges in Meeting its Financial Responsibilities
A report by Dataphyte had earlier stated that Nigeria’s 2022 budget will be financed by debts, detailing the increasing inability of the country to finance its country’s financial demands.
This figure will grow further with the increase of the 2022 budget to N17.1 Trillion.
According to the details of the appropriation bill, Nigeria’s expected revenue inflow for 2022 stands at N10.7 Trillion, this would mean that the country would need to borrow about N6.4 Trillion to finance the 2022 budget.
In context, Nigeria will be spending an equivalent of 70% of its capital expenditure on debt servicing.
Experts had earlier told Dataphyte that the continual spending of huge amounts on debt servicing by the country will harm the infrastructure development strides of the country, warning on the need to tone down the extent of borrowings in the country.
The National development plan (2021-2025) targets that the public debt of the country will grow up to fifty trillion by 2024 and fall back to forty-five trillion by 2025. The growth in public debt will increase the figure of debt servicing in the country further damaging the available revenues for filling infrastructure deficits put at $1.5 Trillion over Ten years.