The Federal Government has disclosed that it would be considering securing additional foreign loan to finance the N6.258 trillion deficit in the proposed 2022 budget, saying the plan had been considered to ensure President Muhammadu Buhari-led administration delivered on its promises of taking the country to the next level.
It explained that though Nigerians have been raising concerns over the administration’s continuous borrowing, the country’s loan was lowest compared to Egypt, South Africa, Brazil, Mexico, the very lowest, and Angola, and that there was nothing to worry about as such was practice among developing nations.
Justifying the move while briefing State House Correspondents on Wednesday after the Federal Executive Council (FEC) approved N16.39 trillion for the 2022 Appropriation Bill in Abuja, The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed disclosed that the total money borrowed as at July 22 was 23 per cent of the Gross Domestic Product.
According to her, it is necessary that the government continue to borrow to in order to fund developmental and infrastructure projects as the country’s revenue cannot fund the budget projections.
She explained that the resultant deficit of N6.258 trillion would be financed by new borrowings of N5.012 trillion (of which domestic – N2.506 trillion and foreign – N2.506 trillion); drawdowns on Project-tied Multilateral/Bilateral loans – N1.156 trillion; and Privatization Proceeds of N90.73 billion.
“If we just depend on the revenues that we get, even though our revenues have 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 is 23% of GDP. Government has been borrowing before this administration and continues to borrow and it is important that we borrow to provide developmental projects in the form of roads, rails, bridges, power and water for sustainable development in this country.
“As at July 2021, the total borrowing is 23% 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%, 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.