The Federal Government has said that the proposed amount of the 22.7 billion dollars requested by President Muhammadu Buhari in the External Borrowing Plan (2016 to 2018) would be invested in infrastructure development and not consumption.
\nMinister of Works and Housing, Mr Babatunde Fashola, Minister of Finance, Mrs Zaynab Ahmed and Minister of State, Transport, Ms Gbemisola Saraki made this known in a public hearing before the joint house committees yesterday.
\nThe house committees are Aids, Loans and Debt Management, and Rules and Business. According to the Debt Management Office, Nigeria\u2019s Total Public Debt Portfolio as at June 30 stood at $83.88 billion (\u00a6 25.7 trillion).
\nThe 8th National Assembly had received the proposed projects for 2016 to 2018 Medium Term (Rolling) External Borrowing Plan put at 30 billion dollars.
\nThe ministers, however, presented the same proposal at 22.7 dollars and gave reasons why the country should have funds as soon as possible.
\nThey emphasised that the loans would promote infrastructure development and job creation.
\nThe Minister of Finance said that the country had a revenue-generating challenge and stressed the need to invest in sustainable projects that would generate revenue. Ahmed said the loan would be \u201cstrictly for infrastructure development.
\n\u201cSo that we can address the deficit that we have. We know we must comply with some criteria; every kobo borrowed will be judiciously used,\u201d she said.
\nAlso, Minister of Works and Housing said Nigeria\u2019s debt portfolio and debt service were being considered.
\nFashola emphasised that investing in capital projects were needed to help the country achieve a self-sustaining economy.
\n\u201cAs we cannot ignore the concerns about debts, so we cannot ignore the concerns and demands for the provision of life-sustaining infrastructure.
\n\u201cWe have passed a budget of several hundreds of billions, but the reality is that over four years, we have never received full funding for any budget. And the reason is simple, there is a deficit, and we cannot finance it.
\n\u201cSome of the roads we are investing in will last for upwards of 20 to 30 years if well maintained and not abused. For rail assets, usually, the tracks will last for at least 100 years. Power plants like the Mambilla will be there for many decades.
\n\u201cSo, we will be spending today\u2019s money to secure tomorrow\u2019s assets that will sustain our growing population and growing economy.\u201d
\nThe Minister of State for Transport also said there was the need to complete Kano-Lagos and Niger Delta coast rails.
\nMeanwhile, t he Debt Management Office says the public debt stock of the country is a cumulative figure of borrowings by successive governments over many years.
\nThe DMO said this in a statement released in Abuja yesterday .
\nIt said that it was not appropriate to attribute the Public Debt Stock to any particular administration.
\nIt, however, explained that President Muhammadu Buhari submitted a request to the National Assembly for approval of the 2016 \u2013 2018 Medium Term External Borrowing Plan for the sum of 22.718 billion dollars.
\n\u201cThis request is not a new one as being perceived but rather it represents those borrowings which have been submitted to the National Assembly but are yet to be approved before the expiration of the eighth Assembly.
\n\u201cThe requests in the Plan are proposed borrowings from multilateral and bilateral lenders.
\n\u201cThe proposed loans are concessional, semi-concessional, long-tenored and are for the purpose of financing infrastructure and other developmental social projects.
\n\u201cAll of which have multiplier effects in terms of job creation, business opportunities and overall increase in Nigeria\u2019s Gross Domestic Product.
\n\u201cAlso, the benefits are long term and will serve generations of Nigerians.
\n\u201cThe proposed New Borrowing is consistent with the subsisting Debt Management Strategy which seeks to replace short term high \u2013interest cost domestic debt.
\n\u201cWith low interest long term external debt and is one of the measures that is being implemented to moderate the level of Debt Service.
\n\u201cThe achievements in this regard are evidenced in the declining share of Domestic Debt in the Total Public Debt from over 83 per cent in December 2015 to about 68 per cent in June 2019,\u201d it explained.
\nThe statement noted that Nigeria had a ceiling of 25 per cent on the total public debt stock to GDP which is Debt to GDP and it had operated within.
\nIt said that the ratios for Dec. 31, 2018 and June 30, 2019 were 19.09 and 18.99 per cent respectively.
\n\u201cThe Debt Service to Revenue Ratio (Debt Service\/Revenue) has however, been higher than desirable and provides strong justification for the current drive to increase Oil and Non-Oil Revenues significantly.
\n\u201cThe debt service to revenue for the years 2017 and 2018 were 57 per cent and 51 per cent respectively.
\n\u201cThe debt service figures have grown as a result of the increase in the Debt Stock and relatively high domestic Interest Rates.
\n\u201cStill on the issue of debt sustainability, when compared to a number of countries, Nigeria\u2019s Debt to GDP is relatively low but the Debt Service to Revenue is relatively high.
\n\u201cThe United States of America, United Kingdom and Canada had Debt\/ GDP ratios of 105, 85 and 90 per cent in 2017 which were much higher than that of Nigeria.
\n\u201cBut because they generate adequate revenues, their debt service to revenue for the same year were 12.5, 7.5 and 7.5 per cent respectively.
\n\u201cThe case was also similar for Brazil, South Africa, Kenya and Mexico who had higher Debt to GDP than Nigeria (74, 53, 57 and 46 per cent respectively but had lower debt service to revenue of 32.20, 11.4, 13.2 and 13.6 per cent respectively.
\n\u201cThis is clear evidence that Nigeria\u2019s revenues are low. This is further demonstrated by Nigeria\u2019s tax to GDP ratio of only six per cent in 2018 compared to Kenya\u2019s 15.7, Morroco 21.8, Cameroon 12.2 and South Africa 27.5 per cent in 2017″
\nThe statement pointed out that the above figures attested to the fact that Nigeria had a revenue challenge rather than a debt problem.
\nAccording to the statement, it is in this regard that all efforts are in top gear to increase revenues through measures such as the Finance Bill and Strategic Revenue Growth Initiative.
\n\u201cOverall, the justification for the borrowing is that many of the projects in the plan are for the development of infrastructure in the areas of roads, railways, waterways and power which will help to unleash the potential of the Nigerian economy.
\n\u201cOther loans such as those for the educational sector will contribute to the development of Nigeria\u2019s human capital, while loans for Agriculture will be used to diversify the economy.
\n\u201cThere will also be funding for Development Finance Institutions to enhance access to finance for Micro, Small and Medium Scale Enterprises.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
The Federal Government has said that the proposed amount of the 22.7 billion dollars requested by President Muhammadu Buhari in the External Borrowing Plan (2016 to 2018) would be invested in infrastructure development and not consumption. Minister of Works and Housing, Mr Babatunde Fashola, Minister of Finance, Mrs Zaynab Ahmed and Minister of State, Transport, […]<\/p>\n","protected":false},"author":1,"featured_media":202488,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[16],"tags":[],"class_list":["post-222606","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/www.thetidenewsonline.com\/index.php?rest_route=\/wp\/v2\/posts\/222606","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.thetidenewsonline.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.thetidenewsonline.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.thetidenewsonline.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.thetidenewsonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=222606"}],"version-history":[{"count":0,"href":"https:\/\/www.thetidenewsonline.com\/index.php?rest_route=\/wp\/v2\/posts\/222606\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.thetidenewsonline.com\/index.php?rest_route=\/wp\/v2\/media\/202488"}],"wp:attachment":[{"href":"https:\/\/www.thetidenewsonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=222606"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.thetidenewsonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=222606"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.thetidenewsonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=222606"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}