The Federal Government has disclosed that the N6.258 trillion budget deficit in the proposed 2022 Appropriation Bill will be financed through local and external loans.
The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, who made this known yesterday, at the end of the weekly virtual Federal Executive Council (FEC) meeting, presided over by President Muhammadu Buhari at the State House, Abuja, also disclosed that FEC approved the proposed 2022 Budget of N16.39 trillion.
The Minister, was in the company of the Minister of Justice and Attorney-General of the Federation, (AGF), Abubakar Malami, and the Minister of Information and Culture, Lai Mohammed.
Explaining why the country needs to borrow despite the outcry from different interests, Mrs. Ahmed said the target to deliver many of the administration’s legacy projects would not be achievable with the move, noting that the generated revenues are barely enough to meet recurrent expenditures
“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 of 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.
On the difference between the price of crude oil and the $57 benchmark for the 2022 Budget, Mrs. Ahmed noted: “you know that the crude oil price in the international capital market is not stable, it goes up and it comes down. Our assessment is that $57 per barrel is a safe zone to be in and we did this after extensive consultations with the CBN, we checked the research work of the World Bank and other institutions, whose concern is investigating and researching on crude oil prices. But you know the revenue in the budget for oil and gas is a function of the level of production as well as the price”.