Buhari's Minister Reveals How Much FG Will Borrow to Fund 2022 Budget Deficit

• The finance minister, Zainab Ahmed has reacted to the federal government’s recent borrowing pattern amidst tough economic realities
• According to Ahmed, the FG would need to borrow more funds to finance the deficit in the 2022 budget
• The minister who defended the FG shed more light on the nation’s excessive borrowing noted that it is still on a minimal level

Following the present economic situation of the country, the minister of finance, budget and national planning Zainab Ahmed, has disclosed why the federal government would borrow more funds.

The Nation reports that Ahmed, on Wednesday, October 6, said that the federal government will borrow to fund the N6.258 trillion deficit in the 2022 Budget.

The minister further allayed fears over the government’s “excessive borrowing” complaints, saying “as at July, the total borrowing is 23 per cent of Gross Domestic Product (GDP) limits.”

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She explained thus:

“The resultant deficit of N6.258 trillion 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 Privatisation Proceeds of N90.73 billion.”

She explained that the final full budget was to be implemented by President Muhammadu Buhari Administration before its exit in 2023, after the Federal Executive Council (FEC) meeting.

Before giving its final approval, FEC reduced the total budget from N16.45 trillion to N16.39 trillion. The total revenue is projected to N10.11 trillion bringing down the deficit to N6.2trillion.

The financial estimates will be presented to the joint sitting of the National Assembly today by the president.

While defending the government’s borrowings, she said the move is necessary to be able to build projects and to ensure they are developed on a sustainable basis, a report by Channels TV also indicate.

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The minister said:

“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 have a problem of revenue. Our revenues have been increasing. We just reported to Council that our revenues from non-oil sector has performed, as July, at the rate of 111%, which means outperforming the prorated budget."

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FG releases a breakdown of budget performance in first 6 months of 2021 as debt servicing gulps 88% of revenue

Meanwhile, Legit.ng had earlier reported that the federal government has again revealed that a significant portion of its revenue in the first six months of 2021 went into paying for matured debt.

This was contained in the 2021 Second Quarter and Half Year Budget Implementation Report obtained by Legit.ng on Wednesday, October 6.

According to the report, N2.31 trillion in the first half of the year was released for budget implementation, with N2.02 trillion of that amount going to debt servicing.

What I told Buhari about borrowings - Lawan

Meanwhile, Ahmad Lawan, president of the Senate, has advised President Buhari to reduce the external borrowings being incurred to fund the country’s annual budgets.

The principal lawmaker advised the president to, instead, focus on blocking financial leakages and avoiding wastage in all tiers of government.

Legit.ng gathers that Lawan said this on Monday, August 23, in Abuja, after a closed-door meeting with President Buhari at the State House.

Source: Legit.ng