FG to borrow N5.012tn to fund part of 2022 budget -Minister

The Federal Government of Nigeria (FGN) plans to borrow N6.25 trillion to finance a portion of the 2022 budget to be presented to the National Assembly on Thursday, the Minister of Finance and Budget, Mrs Zainab Ahmed,has said.

“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.

According to her, FEC also approved the 2022 Appropriation Bill for an aggregate expenditure of N16.39 trillion for presentation to the National Assembly by President Muhammadu Buhari on Thursday.

She said government will continue to borrow to fund 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 were still within 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% 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 of revenue. Our revenues have been increasing. We just reported to Council that our revenues from non-oil has performed, as 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.

“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 the Council 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 that the key assumptions and targets underlying the budget provisions included oil price – 57dollars per barrel; oil production – 1.88 mbpd; exchange rate – N410.15 to a dollar; 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).

“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).

“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.

On the approved 2022 Appropriation Bill for an aggregate expenditure of N16.39 trillion for 2022, she gave the components as the adjustments to the Medium-Term Fiscal Framework 2022-2024; Statutory Transfers of N768.28 billion and Debt Service of N3.61 trillion and Sinking Fund for Maturing Debts of N292.71 billion Naira.

Other are Recurrent Expenditure (Non-Debt) of N6.83 trillion, inclusive of N350.0 billion for the recurrent component of Social Investment Programme; and Aggregate Capital Expenditure of N5.35 trillion, inclusive of GOEs’ capital expenditure, multilateral/bilateral loan funded projects, Capital Supplementation and Grants/Aid funded projects.

According to her, this represents 33% of the expenditure budget.

On special allocations for completion of legacy projects of the Buhari administration, the minister said: “The Federal Ministry of Works and Housing has a provision of N388 billion; the Power sector has about N377 billion; the Ministry of Agriculture has N98 billion; the Transportation Ministry has N189 billion.

“So, all the major projects are being provided for. The target is to make sure that we have some of these key projects completed and commissioned during Mr. President’s tenure.

“Currently, agriculture sector contributes 23% of the GDP. We have record of expanding the agricultural value chain; we’ve had very little or no processing in agriculture until this administration.

“We now have a very large number of fertiliser blending plants, about 42, that are operating at full capacity. We also have a large number of rice mills that didn’t exist before.

“We have a lot of Nigerians that have taken up agriculture as a business, but apart from agriculture, the President is also rolling out rail lines, some of which had been started several years ago, have been completed.

“The Lagos/Ibadan rail line is now put to use. We all know about the Abuja/Kaduna and also the Itakpe/Warri rail line has been completed. Work has kicked off on the Kano to Kaduna end of the Lagos/Kano/Ibadan rail line.

“So, Mr. President wants to leave these rail lines. Rail is very important because it is a major means of moving goods across the country.

“When the rail lines are completed, it will provide much needed relief in terms of movement of goods that our roads now suffer by use of trucks.

“We are also investing in deployment of major roads. Some of them are completed, some are at various levels of completion.

“There’s also the 2nd Niger Bridge that is also going to be completed during the tenure of this administration.”