The government of President Muhammadu Buhari claims that its ongoing reliance on loans is within healthy bounds, despite plans to borrow to cover the N6.258 trillion deficit in the proposed 2022 budget, claiming that borrowing is in Nigerians’ best interests.
“Government has been borrowing before this administration and will continue to borrow, and it is critical that we borrow to fund developmental projects such as roads, rails, bridges, power, and water for the country’s long-term development,” said finance minister Zainab Ahmed after the council meeting in Abuja on Wednesday.
Ms. Ahmed continued, “if we just depend on the revenues that we get, even though our revenues have increased,” the government’s operating expenditures, such as salaries and other overheads, “are barely covered or swallowed up by the revenue.”
Her remarks came as the Federal Executive Council (FEC) approved N16.39 trillion in funding for the fiscal year 2022.
Mrs Ahmed acknowledged that the borrowings have been a source of concern, but she stressed that Mr Buhari’s borrowing appetite is healthy.
Mr Buhari’s habit of obtaining loans to govern the country has been condemned by the country’s main opposition party, the Peoples Democratic Party (PDP), former President Olusegun Obasanjo, and other notable personalities.
Ms Ahmed, on the other hand, justified the borrowings, claiming that they had existed before to the administration and that the entire debt was 23% of GDP as of July.
In comparison to other countries, Nigeria’s borrowing was the lowest, according to the minister.
“As of July 2021, the total borrowing is 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,” she argued.
However, she admitted, “We do have a problem with revenue. Our revenues have been increasing. We just reported to the council that our revenues from non-oil have performed, as of July, at the rate of 111 per cent, which means outperforming the prorated budget.”
President Buhari had previously threatened to go to jail if he continued to borrow. The president filed a new set of proposals to the National Assembly last month, asking for approval to borrow another $4 billion.
The Nigerian Domestic and Foreign Debt Report, published this year by the National Bureau of Statistics (NBS), estimated the country’s total public debt to be N32.2 trillion ($84.57 billion) as of September 2020.
