Nigeria’s Spiralling Debt Crisis: Government Spends Three Times Its Revenue in 2023

A new report from BudgIT, an accountability firm, has revealed alarming figures about Nigeria’s fiscal health, showing that the Federal Government spent three times its revenue in 2023, resulting in a staggering deficit of N13.50 trillion. The analysis of the 2023 fiscal accounts from the Office of the Accountant-General of the Federation shows that government revenue last year totalled N5.99 trillion, while expenditure reached N19.50 trillion, exceeding income by 225 per cent.

The report highlighted the government’s revenues, which came from various sources: N3.80 trillion from the Federation Account Allocation Committee, N1.98 trillion from independent revenues, and N202.54 billion from other channels. This significant deficit underscores the government’s continued drift away from fiscal responsibility, as it consistently borrows far more than it earns, perpetuating a vicious cycle of debt and financial instability.

Victor Agi, a fiscal accountability expert at the Centre for Fiscal Transparency and Integrity Watch, has sounded the alarm on Nigeria’s escalating debt crisis, warning of severe economic implications if urgent action is not taken. “The economy is bleeding, and we are struggling to fund capital expenditure. The implications are dire,” Agi stated.

Agi criticised the government’s handling of the economy, arguing that it has shown a pattern of fiscal irresponsibility over the years. “It shows how irresponsible the handlers of the economy have been for a couple of years now,” he said, noting that Nigeria has experienced no significant economic growth since 2014. “If nothing is done about it, it will continue,” he warned.

He expressed concern over the government’s borrowing habits, saying, “The problem is not the fact that the government is borrowing, but what are we borrowing for? We are borrowing to fund debt, to fund frivolities.” Agi pointed out that only 4.4 per cent of the government’s N19 trillion expenditure last year was allocated for capital expenditure, describing this as “not acceptable.” He warned that the implications of the government’s actions are already being felt, with the cost of living escalating and ordinary people struggling to make ends meet.

A public policy enthusiast, Femi Oladele, also expressed concerns over the government’s spending habits, warning that Nigeria’s economic woes may worsen if not addressed. Oladele noted that spending more than one earns is not inherently bad but emphasised the need to examine the breakdown of such expenditures. “If I earn N200,000.00 monthly but spend N1,000,000.00 in three months – that’s not necessarily bad. But if we check what I spent the money on, we can then draw subjective inferences,” he said.

He questioned the government’s priorities, suggesting that they may be relying on unknown “windfalls” to sustain their spending habits. “In my opinion, it looks like our Government believes (or knows) that there is some kind of windfall somewhere that others don’t know,” Oladele stated.

Both Agi and Oladele called for more prudent fiscal management and a focus on local investment to spur economic growth. “Most of those spendings are unfortunately not local, so would have little impact on our economy directly. We need to invest locally to spur economic actions that can escalate growth and development,” Oladele emphasised.

As Nigeria continues to grapple with its fiscal challenges, experts agree that immediate and decisive action is needed to prevent further economic decline.