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Nigeria proposes new debt to fund infrastructure destroy by flood, seeks parliament approval of N819.5 bln supplementary budget

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Nigeria on Wednesday proposed a last-minute supplementary budget of N819.54 billion for the 2022 fiscal year, even when the parliament is yet to ratify the 2023 appropriation bill presented to it two months ago.

The new supplementary budget is expected to push up domestic debt to around N22.57 trillion by the end of the year.

According to a letter sent to the National Assembly by President Mohammadu Buhari, the supplementary budget is expected to be financed through domestic borrowing.

The proposal, according to Buhari is meant to fix various infrastructures destroyed by floods across the various states in the country a few months ago.

The letter read in plenary by the President of the Senate, Ahmad Lawan showed that the budget is meant for the capital expenditure component of the 2022 budget with an attendant increase of deficit to N8.17 trillion.

“The year 2022 has witnessed the worse flood incident in recent history which has caused massive destruction of farmlands at a point already closed to harvest season.

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“This may compound the situation of food security and nutrition in the country. The flood has also devastated road infrastructure across the 36 states and the FCT (Federal Capital Territory) as well as bridges nationwide that are critical for the movement of goods and services.

“The water sector was equally affected by the flood and there is a need to complete some ongoing critical projects that have already achieved about 85 percent completion. The nine critical projects proposed in the sector cut across water supply, dam projects, and irrigation projects nationwide.

“I have approved a supplementary budget of 2022 appropriation of N819.536bn, all of which are capital expenditures. The supplementary will be financed through additional domestic borrowings which will raise the budget deficit for 2022 to N8.17tn and deficit to GDP ratio to 4.43 percent,” the president said.

Being a proposal coming 10 days to the New Year, the President of the Senate immediately forwarded it to the Senate Committees on Appropriation, Finance, Works, Water Resources and Agriculture for expeditious consideration.

The Federal Government’s initial plan was to borrow N5.01 trillion (with domestic debt put at N2.51 trillion) to finance part of the N6.26 trillion budget deficit.

With the newly proposed N819.54 billion domestic debt,  the Federal Government’s domestic borrowing is expected to hit N3.33 trillion for 2022.

Data from the Debt Management Office showed that the Federal Government’s domestic debt stock was N19.24 trillion as of December 2021.

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