The Minister of Finance, Mrs. Kemi Adeosun, on Thursday said that the inability of the Federal Government to generate enough revenue to meet its obligations had left it with no other choice than to turn to international financial institutions for loans to finance critical infrastructure projects.
She said that with a huge monthly personnel expenditure of about N210bn, coupled with additional debt service burden of N120bn,making a total of N330bn every month, it had become difficult with the low receipts from oil to generate enough revenue to meet these obligations as well as fund capital projects.
The minister stated these in Abuja at the 14th Daily Trust Dialogue, which had as its theme: ‘Beyond recession: Towards a resilient economy’.
The Senate had on November 1, 2016 unanimously rejected President Muhammadu Buhari’s 2016-2018 external borrowing rolling plan through which the sum of $29.9bn was requested. It asked the executive to provide further details on it.
The budget has a huge deficit of N2.36tn (or 2.18 per cent of the country’s Gross Domestic Product), a figure the President said would be financed through borrowing.
While a lot of people have faulted the borrowing plan, which seeks to borrow the sum of $29.9bn from foreign sources, the Finance minister said the realities on ground had made it imperative for Nigeria to get the loan if it must survive the economic crisis.
She said, “Where are we today and what’s the problem? This is my requirement every month: salaries, statutory transfers every month, I need N210bn every month. Debt, not the debt that we are planning to take, but the inherited debt; I need N120bn just to service it. So, every month, I need N330bn
“Just to give you an idea of where we are today, last month’s FAAC allocation was N310bn. So, the Federal Government got about N140bn; but I must cover N330bn a month before we can do a single capital project.
“So, when we start the argument, should we borrow, should we not? The truth is that we have no choice. If you are waiting for the oil price to recover, the prognosis is that it’s not going to go back to $110 per barrel any time soon.”
Adeosun added, “So, to get the economy growing, we have no choice but to look for low-cost funds and put that infrastructure in place, because it is the infrastructure that will unlock the economy.
“It is the infrastructure that will allow us to, rather than importing powdered milk, have the cows in Taraba State with huge potential.”
The minister lamented that if the country had adopted the steps being taken now to reduce expenditure through efficiency in spending when oil price was $110 per barrel, Nigeria would not have slipped into recession.
She said apart from borrowing, part of the survival strategies of the government was to make sure that revenue generating agencies remitted their operating surpluses to the coffers of the government.