As Nigeria’s debt profile continues to rise, President Muhammadu Buhari’s regime has made plans to borrow N5.62 million in 2022.

This followed the Federal Executive Council’s approval of the 2022 – 2024 Medium Term Expenditure Framework and the Fiscal Strategy Paper (MTEF/ FSP).

Finance minister Zainab Ahmed disclosed this after the council meeting, presided over by Mr Buhari in Abuja on Wednesday.

The Debt Management Office (DMO) put Nigeria’s public debt stock at N33.107 trillion (about $87.239 billion) as of March 31, 2021.

According to the minister, the budget deficit projected for 2022 is N5.62 trillion, up from N5.60 trillion in 2021. The amount represents 3.05 per cent of the estimated GDP, which is slightly above the three per cent threshold specified in the Fiscal Responsibility Act (FRA).

She explained, “The FRA empowers Mr president to exceed the threshold. In his opinion, the nation faces national security threats, and it is our opinion on fact agreed that we can exceed.

“The deficit is going to be financed by new foreign borrowing and domestic borrowing, both domestic and foreign in the sum of N4.89 trillion on privatisation proceeds of N90.73 billion and drawdowns from existing project tied loans of N635 billion.”

According to Corporate Finance Institute, when public savings are negative, the government is said to be running a budget deficit. To spend more than tax revenues allow, governments borrow money and run budget deficits, which are financed by borrowing.

Ms Ahmed stated further, “I just want to state that the project had debt-to-revenue ratio in the report is 43 per cent, which, of course, we know Nigerians all have concerns about the actual debt-to-revenue ratio but in 2019 was 58 per cent. So, this is an improvement over the preceding over 2019. In 2020, the ratio was up to 85 per cent.” 

The minister disclosed that she provided to the council a macroeconomic background, which affirmed that the Nigerian economy had recovered from a negative growth of minus 1.8 per cent in 2020 to 2.5 per cent in 2021.

She added, “Also, the inflation has moderated from a 19-month high to a two-month high. It’s now moderated two months now, that is coming down to 17.93 per cent, and our foreign reserves stand at N34.2 billion at the end of May, which is N640 million declined from the previous month.”

The minister pointed out that the “key macro assumptions” presented and the council approved “is that there’ll be a crude oil benchmark price of $57 per barrel of crude oil for 2022, crude oil production of 1.8 8 million barrels per day, and our exchange rate of N410 to $1, an inflation rate of 10 per cent in 2022, and a nominal GDP of N149.369 trillion.”

“What is interesting is that the non-oil GDP continues to grow at N169.69 trillion compared to all GDP of N14.8 trillion included in the nominal GDP,” said Ms Ahmed.