Finance Minister, Zainab Ahmed on Wednesday refuted claims that Nigeria is in a debt crisis. Ahmed gave the clarification at the public hearing on 2020 budget organized by the Joint Committees of Appropriations.
“I want to ask just for accommodation to speak briefly about what we are doing to increase revenue. We have heard repeatedly that Nigeria is inching into a debt crisis; and we have consistently said that Nigeria does not have a debt crisis,” she said.
She added that “we are borrowing just under 20 percent of our GDP; while multinational institutions project for an economy our size to borrow up to 50 to 55% of our GDP.”
Ahmed further explained: “Our revenue performance by half year is 28 per cent. So, we have designed a strategic revenue growth initiative early this year which has three thematic areas. One is to achieve sustainability in revenue generation. Two is to identify new and enhanced enforcement of existing revenue streams. Three is to achieve cohesion of our people and tools.”
On how the Federal Government intends to finance its deficit; she affirmed that it will mainly be through borrowing and the sale of government’s assets.
“There is a provision of N252billion which is through privatization. There are also non-oil assets sales which is projected to be N328.12billion and then there would be borrowing of N1.594trillion. This borrowing will be in two components.”
She continued: “There is domestic borrowing of N744.9billion and a foreign borrowing of N850billion. The overall budget deficit of N2.7trillion represents 1.52 per cent of the GDP of the country. And the stipulated debt to GDP ratio is in the threshold of the 3% that is provided for in the Fiscal Responsibility Act of 2007.
Nigeria has largely achieved macroeconomic stability, says Finance Minister
“The budget debit is to be financed mainly by borrowing and the borrowing includes both domestic as well as foreign loan.”
Furthermore, the Finance Minister indicated that macroeconomic stability has been largely achieved.
“We are still holding our 2019 growth projection of 3.01 per cent pending end of Q3. Growth is however projected to be around 2.93 per cent in 2020”, the finance minister said.
In her presentation, she noted that the Federal Government’s expenditure including Government Owned Enterprises is projected at N9.449 trillion. Further, the inclusion of project tied loans brings the total expenditure to N10.33trillion.
She added that Fiscal deficit excluding the GOEs is N1.847trillion.
She expounded: “When you include the GOEs and project tied loans, the total fiscal deficit is N2.175trillion. So when you put this against a GDP of N142.96trillion, the deficit to GDP ratio is 1.52 per cent.
“Total non-debt recurrent expenditure is N7.581trillion. So the percentage of capital expenditure to the total Federal Government’s expenditure is 24 per cent. We have additional financing,” Ahmed submitted.