Experts on Thursday advised the Federal Government to consider selling refineries and other assets being used to siphon public resources in order to realise resources required to sell finance part its budget deficit of N6.3tn.
The advice came following advice by the Senate on to the Federal Government to reduce its spate of borrowing and high deficit financing.
President Muhammadu Buhari had said on Thursday that his regime would finance the N6.26tn deficit contained in the 2022 budget with N5tn which his regime proposed to borrow from local and foreign sources.
He stated this while presenting the 2022 Appropriation Bill consisting a total aggregate revenue of N16.39tn before a joint session of the National Assembly.
He acknowledged the fact that his government had exceeded the borrowing threshold approved by the Fiscal Responsibility Act but insisted that certain necessities had compelled it borrow more.
Buhari admitted that Nigerians had genuine reasons to be concerned over the rate of borrowings but that his regime was doing everything to ensure its judicious utilisation in the best interest of Nigerians.
He said, “We expect the total fiscal operations of the Federal Government to result in a deficit of N6.26trn.
“This represents 3.39 per cent of estimated Gross Domestic Product slightly above the 3 per cent threshold set by the Fiscal Responsibility Act 2007.
“Countries around the world have to of necessity over-shoot their fiscal thresholds for the economies to survive and thrive.
“We need to exceed this threshold considering our collective desire to continue tackling the existential security challenges facing our country.
“We plan to finance the deficit mainly by new borrowings totaling N5.01tn.”
Buhari said his regime would source N90.73bn from privatisation proceeds and another N1.16trn drawdowns on loans secured for specific development projects.
The President said, “Some have expressed concern over our resort to borrowing to finance our fiscal gaps.
“They are right to be concerned. However, we believe that the debt level of the Federal Government is still within sustainable limits.
“Borrowings are to specific strategic projects and can be verified publicly.”
He reminded Nigerians that the country had experienced two major recessions in the life of his regime, but that the country survived them through aggressive spending which led to further debt accumulation.
He said, “As you are aware, we have witnessed two economic recessions within the period of this administration.
“In both cases, we had to spend our way out of recession, which necessitated a resort to growing the public debt.
“It is unlikely that our recovery from each of the two recessions would have grown as fast without the sustained government expenditure funded by debt.”
He said his regime’s target over the medium term was to grow the nation’s revenue-to-GDP ratio from about eight per cent currently to 15 per cent by 2025.
He said, “At that level of revenues, the Debt-Service-to-Revenue ratio will cease to be worrying.
“Put simply, we do not have a debt sustainability problem, but a revenue challenge which we are determined to tackle to ensure our debts remain sustainable.
“Very importantly, we have endeavoured to use the loans to finance critical development projects and programmes aimed at improving our economic environment and ensuring effective delivery of public services to our people.”
Credit: punchng.com
