The Federal Government of Nigeria has disclosed that it is increasing borrowing over the course of the year because of the effect of the Coronavirus pandemic on the country’s revenue and the unexpected spending in the health sector.
The Director-General of the Debt Management Office, Patience Oniha, had in her presentation before the Senate Committee on Foreign and Local Debts, said the proposed new 2020 budget of N4.56tn.
Oniha said that the budget deficit would be financed through domestic borrowing of N2.19tn and external borrowing of N1.98tn, amounting to N4.17tn.
According to her, the increase in the new borrowing for 2020 is due to the increase in the deficit in the budget from N2.18tn to N4.58tn.
She said, “The revision of the 2020 budget became necessary due to the effects of COVID-19 on Nigeria’s revenues and the need for new (previously unbudgeted) spending on health to meet the health challenges occasioned by COVID-19.”
“The subsisting 2020 Appropriation Act had a total expenditure of N10.59tn and a deficit of N2.18tn to be part-financed through new domestic borrowing of N744.98bn and new external borrowing of N850bn.”
“The N850bn new external borrowing, which was to be raised through Eurobonds has been converted, with the approval of the National Assembly, to domestic borrowing due to lack of access to the international capital market at this time. Thus, the total new borrowing, which is all domestic, is N1.59tn.”
“The proposed new domestic borrowing of N2.19tn will be raised from the domestic market through the issuance of Federal Government of Nigeria Bonds, FGN Savings Bonds, Sukuk, Nigerian Treasury Bills and possibly, a Green Bond. As at May 29, 2020, a total of N1.32tn had been raised. There is also an ongoing offer for Sukuk of N150bn.”