Recession Bites Harder, Forces FG To Cut Spending
It doesn't look like the recession in Nigeria is going anywhere anytime soon, at least not according to the Federal Government.
Despite claims of Nigeria having already come out of recession, news coming from the federal government suggests the recession continues to take its toll. Even the government is not spared.
To show how this is affecting the government, it must now cut the money that its ministries and agencies spend.
The 2016 budget had under-performed its revenue projections as government recorded total revenue of 2.9 trillion Naira only, out of its 6 trillion Naira budget.
In 2016, the government required 1.3 trillion Naira to pay interest on loans and 2.2 trillion Naira to pay personnel.
So, by the time workers got paid, interest on debt paid, the cost was already at 2.5 trillion Naira out of the total 2.9 trillion Naira revenue.
“So, your total revenue is taken up by personnel and interest on loans and that is why overheads are not released on time because it takes least priority.
“Right now, we are in May and overheads have only been released for January and February, yet everyone has collected salaries up to April and are warming up to collect for May,’’ Ben Akabueze who is the Director General of Budget Office of the Federation told the Director General of News Agency of Nigeria, NAN, Bayo Onanuga during a courtesy call on Thursday.
This was in reaction to Onanuga’s complaints that the overheads allocated to the news agency has been reduced significantly.
“The picture you’ve painted about declining overhead allocation cuts across all agencies of government. And the primary reason is that government has grown excessively.
“It may not necessarily translate to any meaningful change in what you get, because government have got too many agencies that didn’t exist at that time when you were getting 40 million Naira per month, but now exists,’’ ,” Akabueze explained.
He pointed out that in the 2017 budget, personnel cost and pension eat up 30% of the budget while debt servicing plus interest takes up another 25%.
“In the decade up to 2015, the country spent an average of 10% on capital expenditure. That is part of why the economy is at the state it is today with very poor infrastructure,” Akabueze said.