President Muhammadu Buhari in his independence day speech on Monday reiterated government’s commitment to boost the economy by spending big on capital expenditure. According to the President, Seven hundred and twenty point five billion naira has so far been released this budget year to capital projects.
However, the recently released CBN half-year economic report suggest the Government has spent just N422 billion in the first half of the year on Capital Expenditure only. In contrast the government has spent about N2.2 trillion on recurrent expenditure within the same period.
A further breakdown of the recurrent expenditure showed that the non-debt component represented 73.4%, while debt service payments accounted for the balance of 26.6%. So in essence the government has spent about N1.65 trillion on non-debt recurrent expenditure (63%) out of its budgeted total of N2.6 trillion in the first half of 2016.
A breakdown of the total expenditure showed that the recurrent component accounted for 72.6 per cent, while capital and statutory transfers constituted for 19.8% and 7.6%, respectively. The government has now spent a total of about N2.8 trillion in total expenditure for the first half of the year. The President had promised a total of N1.8 trillion on Capital Expenditure (or 30% of total Budget) and N2.6 trillion on non-debt recurrent expenditure.
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In terms of revenue, only N1.24 trillion has been earned by Government. With actual recurrent expenditure looking likely to surge past budgeted expenditure, Nigeria appears to be on track to post yet another record government deficit. Deficit is currently around N1.6 trillion about 72% of projected deficit of N2.2 trillion and already more than the N1.48 trillion recorded in the whole of 2015.
Analysts believe the country could be headed for a deficit of around N3 trillion at the end of the year, considering the impact of the floating of the naira as well as the inability of the government to produce beyond 2bpd of oil consistently for a quarter.