The minister finance, budget and national planning, Mrs. Zainab Ahmed, has defended the spate at which the federal government take foreign loans saying the borrowing has so far been done responsibly and sensibly.
Recall that debt management office said recently that the country’s debt profile as of March 2021 stood at N33.107 trillion.
Speaking at a press briefing yesterday in Abuja, Ahmed the borrowed fund would be spent on critical infrastructure that would generate employment.
At the briefing were minister of information and culture, Mr. Lai Mohammed, minister of state, budget and national planning, Mr. Clem Agba and the newly appointed statistician general, Dr Simon Harry.
The briefing was to provide some insights into the recent development around the nation’s gross domestic product which grew by 5.0 per cent (year-on-year) as announced by the National Bureau of Statistics (NBS) for Q2 2021.
Asked whether government’s continued borrowing would not impact negatively on the economic growth recorded so far, the minister said the loans were targeted at critical infrastructure that would on their own yield proceeds for the country.
“We are borrowing sensibly and responsibly to invest on critical infrastructures. These investments will make returns in future.
“We are borrowing with a very close consideration to the sustainability of the borrowing. The borrowing level for Nigeria today is still 23 percent of the GDP.
“I have said it several times that the problem we have in Nigeria is that of revenue, and when you look at the country that are within the peer group with Nigeria, there are some that had 50 per cent growth that are now at about 70 per cent growth.
“We are at 53 despite the escalated borrowing we had to deal with in 2020; also in 2021, to get a good grip on the economic situation that was occasioned by COVID-19 pandemic and in our case, due to the crash in crude oil price.
“We are borrowing sensibly; we are also borrowing to invest in critical infrastructure like power, water, roads and rails which are investments that are required to enhance business productivity in the country today.
“These businesses will grow, they will not only pay taxes; they will also employ people. If we don’t do this, we will regress even from where we are today. It is a necessary investment so we are borrowing responsibly.
“We are making sure what we are borrowing is applying to major infrastructure that will return revenue in the near future.”
On the 2021 budget deficit, the minister said: “We have an approval in the 2021 budget to fund the budget deficit 50 per cent locally and 50 per cent externally. The 50 per cent external borrowing is 6.1 billion Euros; we are planning to use about half of that from Eurobonds and the other half using other windows such as multilateral and bilateral sources.”
She further said Nigeria’s GDP would have posted more impressive performance but for the increasing security challenge.
“The 2021 second-quarter growth reflects better economic performance compared to the same quarter last year. The same quarter last year we had negative growth of -6.10 per cent. It is also better than the first quarter of 2021,” Mrs. Ahmed told journalists at a press briefing where she reviewed the latest results from the NBS.
“The service sector recorded a strong performance, growing by 9.27 per cent this reporting quarter – representing the fastest growth in this sector since 2010.
“The second-quarter growth of 2021 would have been much stronger than the 5.01 percent, but for agriculture, that recorded a slightly lower growth. A number of bottlenecks within the system, including insecurity, negatively affected the sector. Also, the industrial sector slowed down to -1.3 per cent,” she added.
