DESPITE the outcry against frequent borrowing, the federal government Wednesday hinted of its plan to borrow more in order to finance the N6.258 trillion deficit in the proposed 2022 budget.This is coming In the heels of the Federal Executive Council (FEC) approval of N16.39 trillion for the 2022 Appropriation Bill.
The Federal Government has also explained that the total money borrowed as at July 22 was 23 per cent of the Gross Domestic Product.
The Minister of Finance, Budget and National Planning, Zainab Ahmed disclosed the council’s approval at Wednesday’s meeting while briefing State House correspondents at the end of the meeting presided over by President Muhammadu Buhari, at the residential Villa, Abuja.
The Minister maintained that it was necessary that the government would continue to borrow to in order to fund developmental and infrastructure projects as it does not get enough from its revenues.
According to her, “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 boring, 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.”
Responding to questions, she further justified the plan for more borrowing, arguing: “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 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.
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 gave 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 Privatization Proceeds of N90.73 billion,” she stated.
On the approved 2022 Appropriation Bill for an aggregate expenditure of N16.39 trillion for 2022, she gave the components as the adjustments to the Medium-Term Fiscal Framework 2022-2024; Statutory Transfers of N768.28 billion and Debt Service of N3.61 trillion and Sinking Fund for Maturing Debts of N292.71 billion Naira.
Others are Recurrent Expenditure (Non-Debt) of N6.83 trillion, inclusive of N350.0 billion for the recurrent component of Social Investment Programme; and Aggregate Capital Expenditure of N5.35 trillion, inclusive of GOEs’ capital expenditure, multilateral/bilateral loan funded projects, Capital Supplementation and Grants/Aid funded projects.
According to her, this represents 33% of the expenditure budget.
Ahmed said President Buhari was intent on leaving improved agriculture production as jus legacy, adding: “Currently, agriculture sector contributes 23% of the GDP. We have record of expanding the agricultural value chain; we’ve had very little or no processing in agriculture until this administration.
“We now have a very large number of fertiliser blending plants, about 42, that are operating at full capacity. We also have a large number of rice mills that didn’t exist before.
“We have a lot of Nigerians that have taken up agriculture as a business, but apart from agriculture, the President is also rolling out rail lines, some of which had been started several years ago, have been completed.