President Muhammadu Buhari has detailed the rationale behind the solicitation for external loans despite the country’s huge debt profile.
Buhari made this clarification during a presentation of the 2022 budget before a joint session of the National Assembly in Abuja on Thursday.
According to the President, “the total fiscal operations of the Federal Government is in a deficit of 6.26 trillion Naira. This represents 3.39 per cent of estimated GDP, slightly above the 3 per cent threshold set by the Fiscal Responsibility Act 2007.
“We plan to finance the deficit mainly by new borrowings totalling 5.01 trillion Naira, 90.73 billion Naira from Privatization Proceeds and 1.16 trillion Naira drawdowns on loans secured for specific development projects.
“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 for specific strategic projects and can be verified publicly.”
President Buhari noted that the loans are necessary in order “to finance critical development projects and programmes aimed at improving our economic environment and ensuring effective delivery of public services to our people”.
According to the president, “the mandate of the FG is to ensure:
a. the completion of major road and rail projects;
b. the effective implementation of Power sector projects;
c. the provision of potable water;
d. construction of irrigation infrastructure and dams across the country; and
e. critical health projects such as the strengthening of national emergency medical services and ambulance system, procurement of vaccines, polio eradication and upgrading Primary Health Care Centres across the six geopolitical zones.”
