2024 Quarter Three: Debt Service Overcrowds Gov’t Expenditure in Key Economic Areas

Finance Minister Hon Seedy Keita tabling 2025 Executive Budget © Askanwi Media

By Yusef Taylor, @FlexDan_YT

Askanwi’s latest budget analysis shows that Debt Service continues to overcrowd Government’s Expenditure in key economic areas such as health, education, agriculture and infrastructure in 2024 with the situation expected to worsen in 2025. Our calculations shows that the Government underspent by D518 million and also collected D1.54 billion less than projected in revenues in the first three quarters of 2024.

All this has left the government with a Budget Deficit of D1.47 billion for the first three quarters of 2024. To put this in perspective, the overall Budget Deficit for the year was projected to be only D595 million which is D879 million less than the actual Deficit for the first three quarters of the year. This represents over 147% of the projected Budget Deficit for the year.

Our calculations were applied on the Minister of Finance and Economic Affairs (MoFEA) figures issued on the tabling of the 2025 Executive Budget delivered in mid-November 2024.

Calculations using MoFEA statement issued on tabling on 2025 Executive Budget © Askanwi

Access to Information Issues and Lack of Budget Oversight

Besides the late tabling of 2025 Executive Budget in Parliament, the MoFEA has failed to provide timely Budget Information on the government’s execution of the 2024 Budget for most of the year. The most glaring failure is the lack of oversight all through-out the year with the Finance Minister’s failure to provide an update to Parliament on the Government’s Execution of the 2024 Budget in the second and third quarter of the year.

This failure was rubber stamped by Parliament who have consistently failed to summon the finance minister to provide quarterly Parliamentary updates during its Second and Third Ordinary Session of the 2024 Legislative year.

In addition, our medium has been monitoring the MoFEA’s publication of Budget Data on their website which currently boasts only the End of August 2024 Budget Performance Report. At the time of this publication, the end of October 2024 Performance Budget Report should be online for members of the public. Due to this our analysis of which individual Ministries, Departments and Agencies (MDAs) are overspending and underspending is limited to the end of August 2024. It’s important to note that the August 2024 Budget Performance Report “excludes below the line expenses” which is a very worrying trend and indicates that there are more expenditures that have not been revealed by the Government.

Below is an image of the Expenditure by BE as at August 2024.

End of August 2024 Budget Performance Report © MoFEA

Over D1.54 Billion in Revenues Under collected

To assess the Government’s performance on revenue collection our reporter calculated the pro-rata quarterly amount of Revenues projected for collection in the first three quarters of the year and the difference with the actual revenues in the same period. This information has been used to digitise the graph below.

According to the Finance Minister’s speech, “as at end September 2024, revenues, including program grants, totaled D17.90 billion, exceeding projections of D17.02 billion by 5%”. On the contrary our calculations shows that the government should have collected over D19.44 billion in the first three quarters but only collected D17.903 which is D1.54 billion less than it planned to for the first three quarters of this year.

The main areas where revenue collection significantly improved are Domestic Revenue (over D580 million collected), Tax Revenue Exclu Int’l Trade (over D348 million collected) and Non-Tax Revenue (over D273 million collected) than the projected pro-rata quarterly amount for the same period.

According to Finance Minister Keita, “Tax revenues amounted to D13.24 billion, a 3.36% increase above projections. Additionally, non-tax revenues, particularly administrative fees, reached D4.40 billion, significantly surpassing the D3.53 billion target. These positive outcomes are due to the ongoing domestic resources mobilization efforts by the Government”.

Unfortunately, all this good domestic revenue collection have been offset by poor performances on the international stage, as International Partners have flattered to deceive by not providing over D2.12 Billion in Budget Support while Taxes on International Trade have also failed to generate some D41 million in the first three quarters of the year 2024.

Calculations using MoFEA statement issued on tabling on 2025 Executive Budget © Askanwi

Government Spent D518 Million Less than Projected

In the first three quarters of the year our calculations shows that the Government has done very well to bring down expenditures by over D518 million. Finance Minister, Hon Seedy Keita explained this in his statement noting that “Government expenditures are expected to be in line with the approved expenditure estimates for 2024”.

Explaining the reasons for this, Minister Keita reveals that “this is mostly as a result of the curtailment of certain expenditures due to reprioritization in order to absorb the unforeseen expenditures during the year”. Our Budget Analysis shows that the government has underspent by a whopping D2.9 Billion in Current Expenditure while only overspending on Capital Expenditure by some D45 million in the first three quarters of the year.

Minister Keita revealed that on Capital Expenditure “projections for the last quarter are estimated at D797 million, bringing the estimated total Capital expenditure in line with the approved capital budget of D3.36 billion”.

Calculations using MoFEA statement issued on tabling on 2025 Executive Budget © Askanwi

Debt Service Overcrowding Key Economic Sectors

One critical aspect of Expenditures is Debt Service and Debt Interest. Debt Interest are all the interest payments which the government owes both locally and externally on top of the principal debt payments. In essence Debt Service is a combination of all the debt interest and principal debt payments issued in the year.

On Debt Interest alone, Finance Minister Keita revealed that “D3.57 billion has been expended up to end-September 2024, of which D2.91 billion or 81.5% relates to domestic interest expenses”. To put this into contrast the latest Budget Performance Report showing expenditures to the end of August 2024 reveals that over D1.44 billion was spent on Health, while only D2.94 billion was spent on Basic and Secondary Education. In this same period, over D3.53 billion has been spent on Debt Service with a over D7.5 billion set to be paid this year in Debt Service.

This proves that Debt Service is overcrowding other key areas of the Economy such as Health, Education, Infrastructure, Agriculture and Tourism to name a few. From January to August just over D1.58 Billion was spent on Infrastructure, over D579 million on Agriculture and over D44 million on Tourism. Next year the government plans to spend a whopping D11 Billion on Debt Service which will further crowd out expenditures on these key areas of the Economy. 

Calculations using MoFEA statement issued on tabling on 2025 Executive Budget © Askanwi