For Nigeria To Become A Wonderful A Country We Must Continue To Borrow — Finance Minister
The Securities and Exchange Commission (SEC) says that Nigeria’s rising debt is a threat, but the Finance Minister of Nigeria, Zainab Ahmed, disclosed that the borrowing will continue in spite of the warning from the capital market regulator.
The warning was made by the Head, Economic Research and Policy Management Division, Office of the Chief Economist, SEC, Afolabi Olowookere during the 5th Annual Budget Seminar organised by the SEC.
Afolabi said in comparison with the gross domestic product of Nigeria, which is 20 percent of economy size, the country is not in a critical position, but he maintained that the Debt, which rose from N5.24 trillion in 2010 to over N32 trillion in 2020, is a threat to the country.
“Total public debt has increased from N5.24tn in 2010 to over N32tn in 2020. Still fine at around 20 per cent of GDP (Gross Domestic Product). But rising debt service is a threat.
“Also shocks to commodities price (are) affecting revenue. And low tax to GDP ratio. Moving towards improved sustainability may require future debt tied to revenue-generating projects.” Afolabi told the participants at the webinar.
It was stated that while debt and deficit have risen significantly in ten years, “capital expenditure and infrastructure estimates have not increased much. Implying deficit is often incurred to finance short-term consumption (unproductive) items,” the commission stated.
But Ahmed said the government will need to Continue consuming debt in order to fund infrastructure immediate expenditure needs, “In order to provide the necessary infrastructure and still continue to meet other immediate expenditure needs, government often adopts deficit budgets which have to be financed through borrowing.
She said the N5.6 trillion deficit in the N13.59 trillion budget will be funded by loans from domestic and foreign sources, “The budget also has an overall deficit of N5.6tn to be financed almost equally from domestic and foreign sources.”
