New Telegraph

FG proposes N5.01trn borrowing plan for 2022 fiscal year

The Federal Government, yesterday, indicated that it had provided N5.01 trillion borrowing plan for the 2022 fiscal year, to be obtained from internal and external sources. The proposed borrowing plan was made known by President Muhammadu Buhari while laying the 2022 budget estimates before a joint session of the National Assembly.

Presenting the fiscal estimates, which he tagged ‘Budget of Economic Growth and Sustainability,’ President Buhari justified the concerns of Nigeria about the excessive borrowing of his administration. He, however, insisted that the All Progressives Congress (APC) would continue to borrow for the country to survive and also provide developmental infrastructure for the citizenry. The President noted that Nigeria was not the only country that exceeded her borrowing threshold, stressing that his administration had been able to judiciously apply the loans borrowed so far.

He said that the proposed loans would be used to tackle insecurity, provide rail and road infrastructure and other essential amenities in the country “We expect the total fiscal operations of the Federal Government to result in a deficit of N6.26 trillion. This represents 3.39 per cent of estimated GDP, slightly above the three per cent threshold set by the Fiscal Responsibility Act 2007. Countries around the world have to of necessity over-shoot their fiscal thresholds for the economies to survive and thrive. “We need to exceed this threshold considering our collective desire to continue tackling the existential security challenges facing our country. “We plan to finance the deficit mainly by new borrowings totalling N5.01 trillion, N90.73 billion from privatization proceeds and N1.16 trillion drawdowns on loans secured for specific development projects.

“Some have expressed concern over our resort to borrowing to finance our fiscal gaps. They are right to be concerned. However, we believe that the debt level of the Federal Government is still within sustainable limits. Borrowings are to specific strategic projects and can be verified publicly. “As you are aware, we have witnessed two economic recessions within the period of this Administration.

In both cases, we had to spend our way out of recession, which necessitated a resort to growing the public debt. It is unlikely that our recovery from each of the two recessions would have grown as fast without the sustained government expenditure funded by debt,” he said.

On parameters and fiscal assumptions of the 2022 Appropriation Bill, Buhari explained that it was based on the 2022-2024 Medium Term Expenditure Framework and Fiscal Strategy Paper. He said that oil price benchmark was pegged at $57 per barrel; oil production estimate at 1.88 million barrels (inclusive of Condensates of 300,000 to 400,000 barrels per day); exchange rate at N410.15 per US dollar; and projected GDP growth rate at 4.2 percent and 13 percent inflation rate. He stated that based on these fiscal assumptions and parameters, total federally-collectible revenue wasestimated at N17.70 trillion in 2022. Buhari explained further that while total federally distributable revenue is estimated at N12.72 trillion, total revenue available to fund the 2022 Budget was estimated at N10.13 trillion, an amount which includes grants and aid of N63.38 billion, as well as the revenues of 63 governmentowned enterprises.

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