The federal government has hinted of its readiness to secure both local and foreign loans to finance the N6.258 trillion deficit in the proposed 2022 budget.
This is just as the Federal Executive Council (FEC) has approved the 2022 Appropriation Bill with an aggregate expenditure of N16.39 trillion.
Also yesterday, the two chambers of the National Assembly approved President Muhammadu Buhari’s revised proposal of the 2022-2024 Medium Term Expenditure Framework (MTEF-FSP) and also okayed N16.39 trillion federal budget proposal for 2022.
On the same day, President Buhari’s letter requesting to present the 2022 Appropriation Bill to the federal legislators at a joint sitting tomorrow was read at both chambers by the presiding officers during plenary.
The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, who disclosed government’s plan to borrow to finance the deficit in the 2022 proposed budget, while speaking to journalists after yesterday’s meeting presided over by President Buhari, maintained that government would continue to borrow to fund infrastructure projects as it does not generate enough resources from its revenues.
Nigeria’s public debt has risen to N33 trillion.
According to Ahmed, Nigeria’s revenues could barely accommodate services even as she emphasised that despite concerns about the country’s mounting debt profile, its borrowings were still acceptable limits.
She said: “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 per cent of Gross Domestic Product (GDP).”
She further justified the plan for more borrowing, saying “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.
“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 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.”
According to her, 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.
Others, she said, are Federal Government’s Independent Revenue of N1.82 trillion; Total Projected Federal Government Revenue of N10.13 trillion; Debt Service of N3.61 trillion; Statutory Transfers of N768.28 billion (including N462.53 billion capital component) and
Personnel costs and Pensions of N4.69 trillion; (inclusive of N617.72 billion for the 63 GOEs).
The rest are Overhead costs of N792.39 billion (inclusive of N451.0 billion for the 63 GOEs); and Capital expenditure (inclusive of capital component of Social Investment Programme, capital in Statutory Transfers, capital of 63 GOEs, Capital Supplementation as well as Grants and Donor funding) of N5.35 trillion (inclusive of N647.08 billion for the 63 GOEs).
“The resultant deficit of N6.258 trillion which will 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 Privatisation Proceeds of N90.73 billion,” she stated.