Security gulped 22% of 2021 Budget, minister laments

From Isaac Anumihe, Abuja

The Federal Government, yesterday, lamented its massive expenditures on security equipment and operations, saying that it gulped over 22 per cent of 2021 Budget.

This, she noted, contributed to the fiscal deficit of the budget.

Speaking at the public presentation of the approved 2022 Federal Government Budget, Minister of Finance, Budget and National Planning, Mrs Zainab  Shamsuna Ahmed, said that with Nigeria’s  -4.3 per cent deficit/ Gross Domestic Products (GDP) as at November 2021 and 30 per cent  debt/GDP ratios as  at September 2021, Nigeria’s debt ratio is  the lowest among Africa’s leading economies.

“However, Nigeria’s debt service/revenue ratio (76 per cent as at November 2021) is the  highest among same African top economies. This is a proof that what we have is not a classic debt sustainability problem, but a revenue challenge.

“Tax rates and compliance ratios are significantly higher in these comparator countries; For instance, Nigeria’s Value Added Tax (VAT) rate of 7.5 per cent is the lowest in Africa, and less than 50 per cent of the average rate” she said.

But she assured that efforts are ongoing to fix the revenue challenge, because cutting expenditure is not currently a viable option, as the public expenditure /GDP ratio is also the lowest among same Africa’s leading economies.

“We must, however, continue to rationalise our expenditures as we cannot afford waste; In reality, our largest expenditure items are currently personnel cost, debt service and capital expenditure, which between them account for 85 per cent of the 2022 budget; There is very little scope for cut in any of these over the medium term.

“The most viable solution to our fiscal challenge therefore remains to grow our revenues and plug all leakages.

“Our target over the medium term is to grow our revenue-to-GDP ratio from about 8- 9 per cent currently to 15 per cent by 2025.

At that level of revenues, the debt service-to-revenue ratio will cease to be a critical concern,” the minister explained.