ThE Federal Government exceeded its debt service allocation by N1.15tn for the period between January and November, 2021, documents have shown.
A copy of the public presentation of the 2022 approved budget by the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, showed that the Federal Government allocated N3.32tn for debt servicing in 2021.
Further breakdown showed that from the total of N3.33tn, domestic debt was expected to gulp 2.18tn, foreign debt N940.98bn, and sinking fund N200bn. Based on the allocation, the document further showed that the Federal Government hoped to have spent a total of N3.05tn on debt servicing from January to November 2021.
Further breakdown showed that it hoped to have spent about N2tn on domestic debt servicing, N862.48bn on foreign debt servicing, and N183.33bn on sinking fund.
However, the minister’s presentation document showed that a total of N4.2tn was spent on debt servicing in 11 months, indicating a difference of N1.15tn or 37.9 per cent of the money allocated for debt servicing for the period.
Further breakdown showed that the government spent about N2.2tn on domestic debt servicing, N885.01bn on foreign debt servicing, and N600m on sinking fund.
Although there was no allocation for interest payment on Ways and Means, which is the government’s borrowing from the Central Bank of Nigeria, it still spent N1.12tn on the payment of interest. This then fuels indication that the payment of interests on Ways and Means was a major contributor to the excess in debt service allocation.
The PUNCH had reported that the Federal Government’s excessive borrowing from the CBN through the Means and Ways Advances window could have adverse effects on the apex bank’s monetary policy and subsequently harm domestic prices and exchange rates.