The federal government says the money it borrowed from the Central Bank of Nigeria (CBN) is the most expensive debt it is servicing.
Currently, the federal government is servicing the N23 trillion CBN Ways and Means facility it collected from the CBN with over N2 trillion.
This was disclosed by the Technical Adviser to the Director General of the Budget office of the Federation Prof Olumide Ayodele at the commencement of the training of MDAs on 2024 Budget Preparation using GIFMIS-BPS
According to him, “government paid the CBN over N2 trillion in debt servicing. It is more expensive to borrow from the CBN than to borrow from abroad”.
Ayodele explained that the calculation used to arrive at what the federal government pays to service its debt to the CBN is an interest rate using the Monetary Policy Rate (MPR) plus 2
What that means is that the federal government pays interest on what it borrowed from the CBN at the prevailing interest rate set at the Monetary Policy Committee Meeting plus 2 which is 18.75 plus 2 amounting to 20.75 percent as interest rate to service the N23 trillion debt owed the CBN.
The Adviser to the DG Budget lamented that every time the CBN increases interest rate government’s debt servicing also increases.
As a result of this development, Prof Ayodele has directed all Ministries, departments, and Agencies (MDAs) to work within the budgetary ceiling set for them for the 2023 fiscal year.
Immediately, he gave this directive, attendees at the training expressed concerns over the difficulty in sticking to the 2023 budgetary ceiling.
The MDA officials reminded Professor Ayodele that the price of fueling government pool cars and diesel for powering the office had gone up.
Responding, Prof Ayodele acknowledged the price increase in some government expenditure, but he reminded them they are expected to work within the capital expenditure ceiling set by the government.
According to him, “discussions are on between the minister to align budgetary needs”.
He also assured the MDAs that “resources available for 2024 will be more than what was available for 2023. Don’t add anything to your ceiling, except it has to do with your mandate. The capital expenditure has to be in line with the Medium-Term Expenditure Framework (MTEF)”.
He directed all MDAs to upload their individual MDA budgets to their websites. MDAs whose budget details are not clear will have such details expunged from the 2024 budget.
With regards to revenue generation in 2023, Professor Ayodele stated that the Federal Government of Nigeria as of June 2023 had a retained revenue of N4.06 trillion, “73.5% of the prorata target of N5.52 trillion”. FGN share of oil revenues was N604.10 billion, representing 54.2% performance. Non-oil tax revenues totalled N1.14 trillion (92.7% performance).
“Company Income Tax (CIT) and Value Added Tax (VAT) collections were N592.68 billion and N195.08 billion, i.e., 127% and 101.8% of respective targets “Prof Ayodele said.
“Customs collections (made up of import duties, excise, fees, and federation account special levies) recorded N306.18 billion vs N474.80 billion budget (64.5%). Other revenues amounted to N2.14 trillion, of which independent revenue was N963.25 billion (60.8%), and Government Owned Enterprises (GOEs) N354.77 billion (29.3%)”.
Earlier, the Director General of the Budget Office, Mr. Ben Akabueze, who was represented by Mallam Isa Aliyu Gwangwazo, Director Expenditure, Socials a director in the office, urged all MDAs to harmonize their “sectoral policies and programmes with the overarching National Development Plan 2021- 2025 and the specific programmes of the Bola Ahmed Tinubu Administration.
“We must ensure that our efforts are synchronized, resources are optimally utilized, and the impact of our collective work resonates across the nation” he said.
Akabueze noted that “the President Tinubu’s Agenda sets the stage for a transformative era in our great nation. This agenda outlines the framework for sustainably achieving inclusive socio-economic growth, infrastructural development, and the overall well-being of our people. It is, therefore, incumbent upon us to integrate the tenets of this agenda into our respective roles and responsibilities”.
The DG Budget enjoined MDAs to study the Budget Call Circular in detail and avoid making mistakes that should ordinarily be avoided if they had complied with the relevant sections of the Call Circular.
To this end, “emphasis will be made in one of the modules this year on key items and sections to note in the 2024 FGN Budget Call Circular” Akabueze told the participants.
“For the avoidance of doubt, we have the BOF Helpdesk running at full capacity currently to take care of all enquiries that Budget Officers may have in the course of the preparation of their respective budgets”. [Prompt News]