The Federal Government has disclosed that it is set to increase borrowing following the review of the nation’s 2020 budget, which it said was aimed at reflecting recent economic realities due to the global crash in oil prices as well as rising incidence of the deadly coronavirus pandemic in the country.
It said that the nation’s earlier income projections had taken a huge slump due to the economic effects of the coronavirus infection as well as the fall in global oil prices and that it had become necessary for a commensurate reduction to be effected in the previously approved 2020 budget while making room for loans aimed at facilitating the nation’s response to the viral disease.
The Federal Executive Council (FEC), which was headed by the President, Muhammadu Buhari, stated that the crude oil parameters which had been used in the initial budgetary projections were reduced from $30 to $25, thus leading to the adjustment of the year 2020 budget from N10.59 trillion to N10.52 trillion.
The Minister of Finance, Budget, National Planning, Zainab Ahmed, who confirmed the reduction to newsmen on Wednesday, revealed that the new budget had a deficit of N5.3 trillion which was due to the crash in global oil prices, adding that the excess would be funded through foreign and domestic borrowing by the government.
According to Ahmed, the reduction in budget size did not affect the inclusion of new expenditure which had been brought about by the rising incidence of the global coronavirus pandemic in Nigeria, for which the only source of funding would be through concessionary loans.
“The revised budget is now in the total sum of N10.52tn, a difference of just about N71.5m when compared to the approved budget. This is because, as we cut the size of the budget, we also have to bring in new expenditure previously not budgeted, to enable us to adequately respond to the COVID-19 pandemic,”
“The Federal Government in this budget will have direct revenue of funding the budget of N5.158tn. The deficit to this budget (is) N5.365tn and this will be financed by both domestic as well as foreign borrowings,”
“The foreign borrowings we are doing for 2020 are all concessionary loans from the International Monetary Fund, the World Bank, the Islamic Development as well as Afro-EXIM Bank,”
“There will also be some drawdown of previously committed loans for major ongoing projects that we will be drawing from both existing facilities as well as some special accounts with the approval of Mr. President and the National Assembly.”