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Nigeria will borrow N5.01 bln to fund a portion of 2022 budget, says Ahmed

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Nigeria plans to borrow N6.25 trillion to finance a portion of the 2022 budget to be presented to the National Assembly on Thursday, according the minister of finance and budget, Zainab Ahmed.

At the end of the Federal Executive Council (FEC) meeting on Wednesday, the cabinet approved N16.39 trillion for the 2022 Appropriation Bill.

Also, the Senate at plenary on Wednesday after working on President Buhari’s request to revised the Medium Term Expenditure Framework for 2022, pegged the federal government’s total expenditure at N16.39 trillion, reducing what the president sent by N60 billion.

“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.

Ahmed, while speaking to journalists at the end of FEC meeting maintained that it was necessary that the government would continue to borrow in order to fund developmental and infrastructure projects as it does not get enough from its revenues.

She noted that Nigeria’s revenues could barely accommodate services even as she emphasized that despite the concerns, its borrowings are still acceptable limits

“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 percent of GDP,” Ahmed said.

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.

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“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 of July, at the rate of 111 percent, 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).

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