In order to finance the 2021 budget, the Nigerian government went above board to borrow extra funds to finance the budget in 2021
According to a recent report, the government borrowed about N7 trillion from various creditors to make up for the budget last year
This comes as expenditure surpassed revenue, leaving the government battling a budget deficit which led it to go a borrowing spree
Nigeria’s financial condition became very bad in 2021 as the country’s expenditure overtook revenue leading to a fiscal deficit of N7.3 trillion rather than N6.44 trillion which was approved in the 2021 Appropriation Act, BusinessDay reports, citing a report by Afrinvest, the financial advisory firm.
According to the report, extra borrowings came from domestic and foreign creditors, and the CBN’s Ways and Means
Where did FG borrow the funds from?
The deficit breakdown shows that in 2021, the federal government of Nigeria borrowed N3.218 trillion from the domestic market, surpassing the N2.744 trillion allowed in the 2021 appropriation Act by N474.30 billion. The federal government additionally got N3.14 trillion from foreign creditors as against N2.74 trillion approved in the budget in 2021.
Also, the Nigerian government got N932.6 billion from the CBN’s Ways and Means, contrary to the provisions of the 2021 Appropriation Act, the report said.
In its report which was captioned, The Nigerian Economic and Financial Market Review H1 2022 and H2 2022 Outlook, the company identified the missed target areas by the Nigerian government in 2021 regarding revenue and expedition forecasts which gave rise to huge deficit financing as witnessed last year.
he report stated that despite the recovery of crude oil in the international market, Nigeria struggled to increase production to pre-COVID-19 pandemic levels.
As a result, production tanked to 1.6I million barrels per day in the second quarter of 2021 and 1.72 million barrels per day and has continued on a downward trend since and has decreased to an 8-year low of 1.4 million per day as Russia’s invasion of Ukraine boosted oil prices., the report said.
In the 2021 approved budget, Nigeria supposedly intended to produce 1.86 million barrels per day, which underperformed by 14 per cent.
Vanguard quoted the CBN as saying that deficit spending increased by 23.7 per cent, Year-on-Year, to hit N7.3 trillion in 2021 from N5.9 trillion recorded the year before.
The reported stated that the CBN as said this in its fourth quarter 2021 (Q4’21) Statistical Bulletin report.