In what seems to be a conflicting statement, the Minister of Finance, Mrs Kemi Adeosun remarked that Nigeria would continue on its borrowing spree.
She said this was necessitated by the need to finance the implementation of the Federal Government’s Economic Recovery and Growth Plan (ERGP).
Adeosun said this in a statement signed by the Director of Information, Federal Ministry of Finance, Mr. Salisu Dambatta on Thursday in Abuja.”
The Minister had in a business forum in Abuja few days back stated that Nigeria must not borrow more to fund its budget.
But contradicting this earlier statement, the minister said, “Nigeria will continue to borrow. Nothing has changed. The ERGP provides for an increase in spending over a three-year period, which is reflected in the 2017 budget.”
“In 2017, the government is committed to spending N7.44 trillion, with a projected fiscal deficit of N2.356 trillion, which will be funded by a combination of domestic and international borrowing.”
She added that “Nigeria’s debt to GDP ratio is low when compared to our contemporaries in Africa, and across most of the developed world.”
“We have headroom to borrow and are doing so aggressively in the short to medium term in order to address our infrastructure deficit and to stimulate growth,” she said.
Although the 2017 budget has a fiscal deficit of N2.356 trillion, but borrowing to finance a budget with a relatively large percentage of recurrent expenditure may not be healthy to the economy.
Also, it is important that the FGN look beyond the debt to GDP ratio and take a closer look at the debt to revenue stance of the country. This might be a good eye-opener on the need for the country to tread gently with regards to borrowing.