In an in-depth analysis of data from the Central Bank of Nigeria (CBN), it has been revealed that the Federal Government of Nigeria has incurred a staggering deficit spending of N36.8 trillion over an eight-year period under President Mohammadu Buhari’s administration from 2015 to 2022. The analysis conducted by Vanguard indicates that 77% of this deficit spending occurred in the last four years, specifically from 2019 to 2022.
During the eight-year period, the total revenue amounted to N32.05 trillion, while the total expenditure reached N68.8 trillion, resulting in a deficit spending of N36.8 trillion. In the initial four years (2015-2018), the government recorded N13.9 trillion in revenue but spent N24.3 trillion, leading to a deficit spending of N10.4 trillion.
However, in the subsequent four years (2019-2022), deficit spending surged by 60%. Revenue rose by 31% to N18.2 trillion, and expenditure increased by 83% to N44.5 trillion. Consequently, deficit spending escalated to N26.4 trillion, marking a significant 60% increase compared to the previous four years.
Furthermore, the analysis highlights that over 22% of the eight-year deficit spending was incurred in 2022 alone. In that year, the Federal Government’s revenue grew by 14.7% to N5.05 trillion, while expenditure stood at N13.4 trillion, representing a 14.5% increase from the previous year. Consequently, the government incurred N8.3 trillion as deficit spending, reflecting a 13.6% rise from 2021.
One major contributing factor to the surge in deficit spending is the consistent and substantial increase in fuel subsidy expenses. The analysis reveals that fuel subsidy spending amounted to N9.34 trillion between 2015 and 2022. Notably, annual fuel subsidy spending skyrocketed by 571%, reaching N4.39 trillion in 2022 compared to N654 billion in 2015.
As deficit spending has been primarily financed through borrowing, Nigeria’s total debt stock experienced a sharp rise of 267% or N33.65 trillion. According to data from the Debt Management Office (DMO), the debt stock reached N46.25 trillion in 2022, excluding the N23 trillion borrowed from the Central Bank of Nigeria as Ways and Means.
The International Monetary Fund (IMF) and World Bank have expressed concerns over the escalating deficit spending and the mounting debt. They emphasize the urgent need for bold fiscal reforms, including the removal of fuel subsidies by mid-2023 as proposed in the 2023 Budget. The IMF also emphasizes the importance of strengthening revenue mobilization, tax administration reforms, and well-targeted social spending to put public debt on a sustainable path and reduce vulnerabilities.
As Nigeria grapples with these fiscal challenges, the country faces critical decisions to ensure economic stability and mitigate the impact of rising deficits and debt burdens.
Key Highlights:
- Deficit spending under President Buhari’s administration reaches N36.8 trillion in eight years, with a significant increase in the last four years.
- Fuel subsidy spending plays a major role in escalating deficit, reaching N9.34 trillion over the eight-year period.
- National debt rises by 267% to N46.25 trillion in 2022, excluding borrowing from the Central Bank of Nigeria, raising concerns from the IMF and World Bank.
