The President Muhammad Buhari led Federal Government has announced plans to borrow big time in order to spark up a currently dull Nigerian economy. The plans are part of a 2016 N1.84 trillion ($9.3 billion) borrowing plan which will see the FG tap a third of the requirement from foreign lenders.
Finance Minister Kemi Adeosun confirmed the plan to Bloomberg via telephone. “We need to stimulate the economy because we cannot afford this downturn to be excessively prolonged,” Adeosun told Bloomberg.
“We think we have the headroom to borrow. We’re going to mix it between local and foreign debt. We’re talking to multilateral agencies already and we’re at an advanced stage. Then we’ll look at the foreign capital markets.”
The finance minister points out Nigeria’s low debt to GDP ratio which is 12% compared to Angola (57%) and South Africa (48%) as the major reason the Buhari government can afford to borrow big.
Members of the Nigerian Senate have given their support in principle, with one PDP lawmaker from the South-South saying the President could borrow up to $50 billion as long as he fixed the country.
Many Nigerians have become disenchanted with the current administration due to the financial hardship the toll of the last elections have taken on Nigeria.
The Federal Government also plans to scrap subsidy in order to enhance savings and allow the market to operate more efficiently by cutting out fuel queues and other bottlenecks but this move is expected to draw the ire of Nigerians.
Hopefully gains from other people friendly policies like a social welfare plan for some of the most economically disenfranchised Nigerians are on the way.
Adeosun also plans to cut down on government waste, audit Federal payroll, enforce remittance from government agencies in order to grow and maintain a stable revenue base for the country.