The Minister of Finance, Budget and National Planning, Zainab Ahmed, attributed economic rebound from twin recession that recently hit the country to the President Muhammadu Buhari-led administration resort to borrowing from international and local lenders, saying the initiative pull the country out of the quagmire.
She added that with economic hardship occasioned by coronavirus outbreak and effect of the recessions, the government had taken its ingenuity to shock the economic downturn through borrowing to finance critical projects, support Small and Medium Enterprises (SMEs) and others in regaining balance economic wise.
The minister argued that the persistent borrowing were instrumental to the country’s exit from recessions and that provided the government had shut doors to the initiative, Nigerians and Nigeria may still be struggling with twin effect of coronavirus outbreak and economic downturn.
Justifying the administration’s persistent borrowings on Friday during the Public Presentation and Breakdown of the 2022 Appropriation Bill, Ahmed noted that without the loans, it was improbable that the country would have exited recession in a short time it did despite the world economies suffering the downturn occasioned by the pandemic.
“Having witnessed two consecutive recessions, we have had to spend our way out of recession which contributed significantly to the growth of our public debts. It is unlikely that our recovery from these recessions would have been as fast without the sustained government expenditure funded partly by debt,” she submitted.
Furthermore, Zainab explained that borrowings have helped the government in providing critical infrastructure, among others to boost the economy. “Borrowings are essential to enable us to deploy necessary capital expenditure and invest in human capital development.”
She also added that the apex government spent N2.89tn on debt servicing between January and August, adding that in the first seven months of the year, total expenditure made by the government stood at N8.14tn out of which N2.88tn was utilised for debt servicing, N2.75tn on overhead cost, while N1.75tn was expended on capital projects.
The minister noted that the government generated a total of N3.9tn revenue comprising, Company income tax of N547.5bn; Value added Tax collections of N235.7bn, customs collections of N338.6bn and other revenues which amounted to N1.7tn, adding that the administration serviced a debt of N2.89tn from a total revenue of N3.9tn within the period under review.
The Guild had also reported that Buhari had while presenting the 2022 budget before a Joint Session of the National Assembly on Thursday tagged: ‘Budget of Economic Growth and Sustainability’, 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.