The Federal Government is concluding plans to borrow another N4.28 trillion to finance the 2021 budget, and has already notified the National Assembly.
Should this happen, the nation’s debt profile will hit N32.91 trillion. At the moment, Nigeria’s debt stocks currently stand at N28.63 trillion, as at the first quarter of 2020.
It must however be noted that, so far, only 30% of the 2020 budget has been implemented.
The planned borrowing of N4.28trn was contained in the Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP) forwarded to the Senate on Tuesday by President Muhammadu Buhari for approval.
The final draft of the budget would be prepared based on the parameters and fiscal assumptions of the approved 2021-2023 MTEF/FSP.
In the fiscal document, the government projected the sum of N12.65 trillion for the 2021 budget.
The N5.16 trillion deficit represents 3.62 per cent of estimated GDP, which greatly exceeds the threshold of 3% stipulated in the Fiscal Responsibility Act 2007, according to the document.
The government noted that the deficit would be financed by new foreign and domestic borrowing of N4.28trn; N205.15bn from privatization proceeds and N674.11bn draw-downs on existing project-tied loans.
The Federal Government has on its part, said that the country is faced with a serious revenue problem rather than a classic debt problem.
However, the Federal Government’s decision to borrow more doesn’t sit well with notable economists and experts in the field of budget planning and implementation.
A political economist and faculty member at the Lagos Business School, Professor Bongo Adi, said: “It is not about borrowing money, somebody has to play, and the burden of payment will be burned by the ordinary citizens. When the money is borrowed, we don’t have the institutions to guarantee conversion to value.”
“Our currency keeps losing value. We become a highly indebted country and poverty becomes endemic. The result is that the funds that we need to provide social services will go to debt service.”
Another who is a fellow at the Institute of Chartered Accountants of Nigeria and the Chartered Institute of Taxation of Nigeria, Mustapha Hussain Olanrewaju, said, “A point where our revenue is unable to support our borrowing and this is largely because Nigeria borrows mostly for consumption.”
“If a borrowed fund is not applied to projects that can generate revenue in return, there is no way the fund will be able to fund itself. So, any extra borrowing without improving on our revenue sources will amount to excessive gearing,” he said.