… Wage Bill Constitutes 29.6% Of FG Expenditure
Despite the mounting revenue challenges which had made the federal government to resort to massive borrowing to finance its operations, the administration of President Muhammadu Buhari is planning to spend a whopping N5.33trn on payment of salaries of civil servants in the 2023 fiscal period.
The figure is contained in the Medium-Term Expenditure Framework 2023-2025 which was prepared by the Ministry of Finance, Budget and National Planning.
The MTEF provides the basis for annual budget planning and consists of a macroeconomic framework that indicates fiscal targets, estimates, revenues and expenditure, including government financial obligations in the medium term.
The document, prepared by the Ministry of Budget and National Planning, also sets out the underlying assumptions for these projections, provides an evaluation and analysis of the previous budget and presents an overview of consolidated debt and potential fiscal risks.
Analysis of the document showed that the amount projected for personnel costs rose from the current N4.33trn approved in the 2022 federal government budget to N5.33trn in 2023.
This represents an increase of N1.01trn.
Findings also showed that the N5.33trn projected spending for wage bill constitutes about 29.6 per cent of the entire N17.98trn proposed federal government budget for next year.
Further analysis of the MTEF document showed that personnel cost of Ministries, Departments and Agencies of government rose by N830bn from N3.71trn in 2022 to N4.54trn.
Similarly, the personnel cost of Government Owned Enterprises followed the same pattern rising from N617.72bn in 2022 to N779.31bn next year.
This is despite the implementation of the Integrated Personnel Payroll Information System initiative which is aimed at reducing personnel costs by eradicating the issue of ghost workers.
President Buhari had last year directed the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed to ensure that all employees of the Federal Government are enrolled on the IPPIS platform.
The IPPIS scheme which started in April 2007, is one of the federal government’s reform initiative designed to achieve a centralized payroll system.
It facilitates easy storage and retrieval of personnel records for administrative and pensions processing to aid manpower planning and budgeting as well as to comply with global best practice.
Through the implementation of the IPPIS, over N273.8bn had been saved by the Federal Government.
With about 602 MDAs currently enrolled on the IPPIS platform, analysts have said the impact of the initiative would have been reflective in the budget through a decrease in the amount that is being spent on the wage bill of government.
Analysis by this website showed that over the years, personnel and pension costs account for the largest single item of expenditure in the federal government budget rising steadily in recent times from N1.88trn in 2016 to N2.06trn in 2017 and N2.56trn in 2019.
For instance, in the 2017 Federal Government budget, personnel costs accounted for about 77 per cent of total revenues as against 64 per cent in 2016.
In the 2019 budget, personnel costs amounted to 63 per cent of total revenues of government.
Similarly, personnel emoluments accounted for about 37 per cent of total federal government expenditure between 2015 and 2017 and 31 per cent in 2019.
Despite higher oil prices, oil revenue underperformed in the first quarter of this year due to significant oil production shortfalls such as shut-ins resulting from pipeline vandalism and crude oil theft as well as high petrol subsidy cost due to higher landing costs of imported products.
In the last few years, the nation has relied heavily on the Central Bank of Nigeria’s deficit financing, with the amount peaking at N19trn as of June 2022.
In the midst of the revenue challenges, the country is contending with the massive depreciation of the naira as the nation’s currency dropped to an all-time low of N690 to a dollar at the parallel market on Wednesday.
But speaking on the development, a Macroeconomic and Public Policy Analyst, Prof Ken Ife called on the government to come up with fiscal policy measures that would enable it generate the much-needed revenue to finance its operation.
He said, “The major issue of the government is revenue, it is not about the debt we are owing but the revenue to service the debt we are owing.
“The government revenue is only seven per cent of our Gross Domestic Product and it is the lowest in Africa. The average is about 18 per cent and ECOWAS economic budget criteria put it at 20 per cent minimum.
“We are three times under powered in terms of revenue, it means that if Nigeria is a trailer, the engine driving that trailer is that of a Volkswagen. This is what it looks like, and we need to ramp up revenue by reducing the cost.”