The Federal Government has revealed that it would be financing the N6.258 trillion deficits in the proposed 2022 Budget with domestic and external loans.
Minister of Finance, Budget, and National Planning, Mrs. Zainab Ahmed, disclosed this to State House Correspondents after the week’s virtual Federal Executive Council (FEC) meeting presided over by President Muhammadu Buhari at the Presidential Villa, Abuja.
The Minister, who was in the company of the Minister of Justice and Attorney-General of the Federation, Abubakar Malami, and the Minister of Information and Culture, Lai Mohammed, also disclosed that FEC approved the proposed 2022 Budget, valued at N16.39 trillion.
Explaining why the country needs to borrow despite the outcry from different interests, Mrs. Ahmed said the target to deliver many of the administration’s legacy projects would not be achievable with the move, noting that the generated revenues are barely enough to meet recurrent expenditures
“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 of 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 with revenue. Our revenues have been increasing. We just reported to Council that our revenues from non-oil have performed, like 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,” she explained.
On the difference between the price of crude oil and the $57 benchmark for the 2022 Budget, Mrs. Ahmed noted “you know that the crude oil price in the international capital market is not stable, it goes up and it comes down.
“Our assessment is that $57 per barrel is a safe zone to be in and we did this after extensive consultations with CBN, we checked the research work of the World Bank and other institutions, whose concern is investigating and researching on crude oil prices. But you know the revenue in the budget for oil and gas is a function of the level of production as well as the price.”
