Debt stock to hit N40trn as FG set to borrow N6.258trn to finance budget deficit

…as FG set to borrow N6.258trn to finance 2022 budget deficit

Amid general outcry against mounting debts, the Federal Government has said that it will borrow to finance the projected N6.258trillion deficit projected in the total N16.39 trillion appropriation proposal for the 2022 fiscal year. Minister of Finance and National Planning, Zainab Ahmed, made this disclosure yesterday while briefing newsmen after the weekly Federal Executive Council (FEC) meeting chaired by President Muhammadu Buhari at the Presidential Villa. The minister, who as-sured that the nation was not in any way endangered by the mounting debts, said the total money borrowed by the government so far stood at 23 per cent of the nation’s Gross Domestic Product (GDP).

Ahmed maintained that it was necessary that the government continue to borrow in order to fund developmental and infrastructure projects as it does not get enough from its revenues. She noted that Nigeria’s revenue could barely accommodate services even as she emphasised that despite the concerns, its borrowings were still within acceptable limits. “If we just depend on the revenue that we get, even though our revenue has increased, the operational expenditure of government, including salaries and other overheads, is barely covered or swallowed up by the revenue.

“So, we need to borrow to be able to build these projects that will ensure that we’re able to develop on a sustainable basis. “Nigeria’s borrowing has been of great concern and has elicited a lot of discussions. But if you look at the total size of the borrowing, it is still within healthy and sustainable limits. As at July 2021, the total borrowing was 23 per cent of GDP.” According to her, government had been borrowing before Buhari’s administration and would continue to borrow in order to deliver developmental projects like roads, rails, bridges, power and water for sustainable development in this country. Justifying Nigeria’s debt profile, she said: “As at July 2021, the total borrowing was 23 per cent of GDP. When you compare our borrowing to other countries, we’re the lowest within the region, lowest compared to Egypt, South Africa, Brazil, Mexico, the very lowest, and Angola.

“We do have a problem of revenue. Our revenues have been increasing. We just reported to Council that our revenues from non-oil has performed, as July, at the rate of 111 per cent, which means outperforming the prorated budget. “But our expenditure, especially staff emoluments, have been increasing at a very fast rate, making it difficult to cope with funding of government.

“So, what we have to do is a combination of cutting down our cost, as well as increasing revenue to be able to cope with all that is required for government to do, including salaries, pensions debt service, as well as capital expenditure.” The minister said that FEC noted the changes in the 2022-2024 fiscal projections based on implementation of the Petroleum Industry Act 2021 and other necessary expenditures that should be accommodated in the 2022 Budget. She also disclosed the key assumptions and targets underlying the budget provisions including oil price – $57 per barrel; oil production – 1.88 mbpd; exchange rate – N410.15/US$; oil revenue – N3.15 trillion and non-oil revenue – N2.13 trillion.

New Telegraph