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FG overshoots personnel cost by N406bn

by LOLADE AKINMURELE

October 24, 2017 | 2:31 am
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Nigeria eclipsed its budgeted spend on personnel by 37 percent in the first six months of 2017, spending N1.4 trillion as against the planned N1.08 trillion, data obtained from the Budget Office has shown.
Ballooning personnel costs was driven by a 42 percent overshoot in government workers’ salaries, which was off target by some N404 billion, after gulping N1.3 trillion in the said period against the budgeted N942 billion.

 
Higher government expenditure on personnel costs casts shadows on chances that the government will be able to implement the capital projects in its N7.4 trillion budget, and could mean the level of government debt still has some way to go.

 
The second component that makes up personnel costs- Pensions and Gratuities missed the target by N2.47 billion at N143 billion as against N140 billion.

 
Africa’s biggest oil producer is going through its worst economic slump in 25 years following a plunge in the price and output of crude, which accounts for more than 90 percent of foreign income and two-thirds of government revenue.

 
The overshoot in personnel costs in the six months through June does little to back up Kemi Adeosun, the finance minister’s claims that the government has weeded out some 53,000 ghost workers to save N151 billion in salaries.

 
Yinka Akintunde, the special adviser to Adeosun could not be reached by phone.

 
Adeosun had said this year via social media, Facebook, that “about 53,000 ghost workers had so far been removed from the Federal Government payroll” and work was on-going with the Pension Commission to recover some of the pensions of these “ghost workers.”

 
It is unclear whether the increase in Federal salaries was driven by new recruits but it certainly isn’t fuelled by salary increments, Johnson Chukwu CEO of Lagos-based advisory firm, Cowry Assets, observed.

 

“Salary budget is the easiest to design, so it beats me why we cannot be accurate on that,” Chukwu said by phone.

 

Firat Unlu, the lead India Analyst at the Economist Intelligence Unit was shocked at the development, tweeting via his twitter handle- @firatUenlue “How is it possible to misplan salary payments by this much?”

 

In June, the federal government’s full-year N7.4trn budget, which is 6.2 percent of GDP, was signed by the executive, after being passed by the Senate in May.
Of this, N3.1 trillion (2.5% of GDP) was spent in the seven months through July, according to data compiled by BusinessDay and sourced from the DMO.
Expenditure in the period was 30 percent below the (pro-rata) target and was entirely made up of recurrent spending.
“Our priorities seem misplaced and unsustainable at a time when there is immense pressure on the government’s dwindling revenues,” one source familiar with the matter told BusinessDay on condition of anonymity.
“There have been no salary increments this year, yet the government has overshot recurrent expenditure and what’s most disheartening is that we are spending less on capital projects,” the source said.
There were no capital releases from the full year budget because of its late approval, however, capital releases did not take place in the seven months through July, as the 2016 budget continued to be implemented into the first quarter of 2017.

“Below-target spending – due to delayed capital releases – explains the small budget deficit for the period of 0.8 percent of GDP, by our estimate, versus the 1.5 percent (pro-rata) target,” said Yvonne Mhango, Sub-Saharan Africa economist at Moscow-based consulting firm, Renaissance Capital.

 

Some other expenditure items underperformed the targets set in the Medium-Term Expenditure Framework (MTEF) for the half-year period.
Statutory transfers were less than the set target by N8.19 billion at N209 billion, as against the budgeted N217 billion. Under recurrent expenditure, overheads were below target by N33.38 billion at N76 billion, as against the N106 billion in the budget.
For debt service, the Federal Government spent N127 billion more than planned to service domestic debt, after incurring N871 billion in the half year period as against the budgeted N744 billion.
It however spent N32 billion less on foreign debt service, spending N87 billion as against the N55.8 billion that was budgeted.
“Expenditure outturns, especially on priority programmes in the capital budget, are projected to improve significantly in the latter half of the year as revenues improve,” the DMO said in a statement available on its website.

 

LOLADE AKINMURELE

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by LOLADE AKINMURELE

October 24, 2017 | 2:31 am
12893  |   93   |   0  |   Start Conversation

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