The Federal Government has urged that it is borrowing sensibly and also to invest in critical infrastructure including power, water, and roads. The FG added that the borrowing level for Nigeria today is still low at 23% of the GDP.
This was disclosed by Finance Minister, Mrs Zainab Ahmed, in a meeting with newsmen over Nigeria’s latest GDP report which climbed by 5.01% for Q2 2021, according to the News Agency of Nigeria.
What the Minister said
Ahmed said, “We are borrowing with a very close consideration to the sustainability of the borrowing. The borrowing level for Nigeria today is still 23% 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 countries that are within the peer group with Nigeria, there are some that had 50 percent growth that are now at about 70% growth.”
She added that revenue growth in Nigeria is at 53% and despite the escalated borrowing Nigeria had to deal with in 2020 and 2021, to get a good grip on the economic situation that was occasioned by COVID-19 pandemic and 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,” she said. She added that the FG is making sure that what Nigeria is borrowing is being applied to major infrastructure that will return revenue in the near future.
What you should know
Nairametrics reported last month that the FG spent a total of N1.8Trillion on debt servicing in the first five months of the year, representing about 98% of the total revenue generated in the same period.
Recall the Debt Management Office (DMO) revealed in June that Nigeria’s overall debt stock increased by N191 billion in the first quarter of this year, representing a 0.58% increase from N32.916Trillion as of December 31, 2020.
Nigeria’s total debt stock increased to N33.107Trillion by the end of March 2021, up from N32.916Trillion in December 2020, according to the DMO.