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2022 Budget Review: FG’s Debt Service to Revenue Ratio Drops to 80.66%



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President Muhammadu Buhari

By CSL Research Team

Based on the review of the 2022 budget as contained in the 2023 Federal Government of Nigeria (FGN) approved Budget presentation, the Federal Government’s debt service to revenue ratio dropped further to 80.66% in November 2022 from 83.23% in August 2022.

It was noted in the report that the aggregate Federal Government revenue (January to November 2022) was N6.50 trillion, 13.1% (N978.9 billion) short of the prorated budget of N7.48 trillion for the period.

Of the total, oil revenue wasN586.71 billion, 64.3% (N1.06 trillion) short of the prorated (January to November 2022) budget of N1.64 trillion while non-oil tax revenue was N2.09 billion, 23.3% higher than the prorated (January to November 2022) budget of N1.69 trillion.

A breakdown of the non-oil tax revenue showed Corporate Income Tax (CIT), Value Added Tax (VAT) and customs revenue collections were N108 billion, N295.21 billion, and N639.65 billion representing 158.6%, 124.3% and 102.2% of their respective targets of N681.98 billion, N237.52 billion and N625.59bn.

Other revenues which amounted to N3.72 trillion, fell 6.9% (N273.99 trillion) short of the prorated (January to November 2022) budget of N3.99 trillion and was largely driven by independent revenue (dividend, interests, rental income, etc) which generated N1.32 billion, and N639.27 billion in retained revenue from Government-Owned Entities (GOEs). There was also a windfall N974.49 billion (1,950% higher than N47.53bn budgeted) in grants and donor Funding.

The Expenditure Side

On the expenditure side, the Federal Government spent a total of N12.87 trillion (January to December), 5.4% lower than the prorated (January to November) budget of N13.60 trillion.

Total recurrent expenditure came to N10.25 trillion, constituting 79.6% of total expenditure while capital expenditure amounted to N1.88 trillion, 14.61% of aggregate expenditure.

A breakdown of recurrent expenditure showed that N3.94 trillion (or 30.61%) was spent on personnel cost and N551.41 billion (or 4.28%) was spent on overhead.

Debt service shot up to N5.24 trillion, 75.7% higher than the prorated (January to November 2022) budget of N2.98 trillion. Interest on ways & means came to N1.64 trillion while domestic and foreign debt service took N2.51 trillion and N1.08 trillion respectively.

Overall, budget deficit as of November 2022 was N6.37 trillion, N246.15 billion higher than the prorated budget deficit of N6.13 trillion. This was financed by N5.86 trillion from domestic borrowings (including CBN’s ways & means) and N510.21 billion from foreign borrowings.


While we note the improvement in debt service to revenue ratio from the recent 118.9% to 80.6%, we believe the ratio remains a source of concern.

With total FGN budget deficit for 2023 at N11.13 trillion and national debt projected to reach N77trn (including way and means), debt service to revenue ratio will likely remain high in 2023 or worsen further.

However, we note the consistent growth in non-oil tax revenue which appears to be a bright spot for an improvement in the strained fiscal position.

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