Nigeria Experiencing The Worst Fiscal Crisis Since Independence as Debt Rises to N8.7trn deficit

Nigeria’s Senate President Ahmad Lawan has stated that the economy of Nigeria is in its worst fiscal state since independence.

Lawan disclosed this during the 40th Anniversary Lecture of the Chartered Institute of Taxation of Nigeria (CITN), in Abuja on Tuesday, 2 February 2022.

The senate president expressed his frustration on the revenue need ratio in Nigeria, explaining that the economy is not generating adequate revenue to meet the countries rising demand.

Ahmad Lawan, who was represented by his Special Adviser on Economic Matters, Prof. Nazif Darma, Lawan stated that the government recorded a budget deficit of N8. 74 trillion at end of December 2021.

According to data from the Debt Management Office, Nigeria’s Public Debt rose to N38 trillion as of September 30th, 2021.

Total external debt as at December 2021 was  $38.9 billion or 40.9% of total public debt. Nigeria’s external debt is made up of multilateral, bilateral, commercial, and promissory notes

Multilateral, Bilateral, and Commercial debt printed $18.2 billion, $4.3 billion, and $18.6 billion respectively.

His words; “Our economy is a growing one. We have over 200 million citizens. “We have a birth rate of approximately 3 percent. That means approximately 6 million children are added to the population annually. On a daily basis, 16, 000 new babies are born.

“These demographic indicators are real challenges to providing quality social services and welfare for our citizens. Our Country today is in crises. There are no two ways about it.

“And it will interest you to know that, let me give you some key figures that will, perhaps predicate some of the things that I am going to say. I am not here to deliver a paper but I think it is important for us to remind ourselves of those fundamentals.

 “In 2019, our total debt service was N2.5 trillion. By the end of 2021, it had risen to N4.2 trillion.

“Our total budget deficit in 2019 was N4. 62 trillion. By December last year, it had risen to N8.74 trillion.

“And the contribution of the major revenue generating agencies into the Consolidated Revenue Fund of the federal government, in 2020 it was over N8 trillion, last year, it rose to N11.9 trillion.

“Today, our country’s integrated National Master Plan developed by the National Planning Commission in 2014, indicated that we have a deficit of about N30 trillion in terms of infrastructure delivery.”

The senator also warned against the urge of raising taxes to stifle business activities.

“Even if we increase the rate of taxation, which I will want to urge us to take a look at, it is good to raise taxes but there must be a threshold of taxation that will not stifle the economic activities thereby limiting contributions of the income to be generated from these businesses,” .