President Muhammadu Buhari has blamed his administration’s continuous borrowing on the successive recessions experienced by the country, saying his administration would continue to seek local and external loans in providing shock for the economy and funding other deficit in the 2022 budget.
He explained that though Nigerians have been raising concerns over his administration’s resort to borrowing, the recession supported by outbreak of coronavirus had necessitated the government turn to foreign countries, particularly the Republic of China for loans to sustain the fund critical infrastructures.
On that note, the president said, his administration would also resort to borrowing in funding the N6.26 trillion deficit in the 2022 budget in achieving the total fiscal operations of the Federal Government during the period.
Speaking while presenting the 2022 budget before a Joint Session of the National Assembly on Thursday tagged: ‘Budget of Economic Growth and Sustainability’, Buhari said that the deficit represents 3.39 percent of estimated GDP, slightly above the 3 percent threshold set by the Fiscal Responsibility Act 2007.
Further justifying the government’s borrowing, Buhari noted that countries around the world have to of necessity over-shoot their fiscal thresholds for the economies to survive and thrive, adding that there was need to exceed the threshold considering his government’s collective desire to continue tackling the existential security challenges facing our country.
According to him, we plan to finance the deficit mainly by new borrowings totalling 5.01 trillion Naira, 90.73 billion Naira from Privatization Proceeds and 1.16 trillion Naira drawdowns on loans secured for specific development projects.
“Some have expressed concern over our resort to borrowing to finance our fiscal gaps. They are right to be concerned. However, we believe that the debt level of the Federal Government is still within sustainable limits. Borrowings are to specific strategic projects and can be verified publicly.
“As you are aware, we have witnessed two economic recessions within the period of this Administration. In both cases, we had to spend our way out of recession, which necessitated a resort to growing the public debt. It is unlikely that our recovery from each of the two recessions would have grown as fast without the sustained government expenditure funded by debt.
“Our target over the medium term is to grow our Revenue-to-GDP ratio from about 8 percent currently to 15 percent by 2025. At that level of revenues, the Debt-Service-to-Revenue ratio will cease to be worrying. Put simply, we do not have a debt sustainability problem, but a revenue challenge which we are determined to tackle to ensure our debts remain sustainable,” he said.
However, the president commend what he described as the “immense, patriotic, and collaborative support of the National Assembly in the effort to deliver socio-economic development and democracy dividends for our people.”
“I wish to assure you of the strong commitment of the Executive to strengthen the relationship with the National Assembly. Nigeria is currently emerging from a very difficult economic challenge. We must continue to cooperate and ensure that our actions are aimed at accelerating the pace of economic recovery so that we can achieve economic prosperity and deliver on our promises to the Nigerian people.
“The fiscal year 2022 is very crucial in our efforts to ensure that critical projects are completed, put to use and improve the general living conditions of our people. It is with great pleasure therefore, that I lay before this distinguished Joint Session of the National Assembly, the 2022 Budget Proposals of the Federal Government of Nigeria,” the president said.