The federal government is planning to borrow fresh N4.6 trillion within the next three years, covering 2020 to 2022, to finance its programmes, figures obtained from the ministry of budget and national planning have revealed.
If the N4.6 trillion new borrowings scale through legislative scrutiny and get executed, then Nigeria’s indebtedness to local and foreign creditors would hit about N29.55 trillion by 2022, going by the country’s current debt profile of N24.95 trillion.
The fresh borrowings were contained in the medium term expenditure framework recently submitted to the National Assembly by Muhammadu Buhari, Nigeria’s president.
The MTEF, which is currently being worked on by the committees on finance and appropriation, contains the fiscal strategy of the federal government for the next three years.
An analysis of the document shows that the federal government is planning to borrow N1.7tn in the 2020 fiscal period.
A breakdown of the N1.7 trillion shows that the sum of N850bn is expected to be sourced locally while the balance of N850bn is expected to be raised from foreign creditors.
In the 2021 fiscal period, the government plans to borrow N1.6 trillion which would be sourced in equal proportion of N800bn each from domestic and foreign sources.
For 2022, the government projects to raise N1.3 trillion through debt instruments to finance its operations.
This is made up of foreign borrowing of N650bn and domestic borrowing of N650bn.
Experts said there was the need to be concerned about the nation’s debt as a huge chunk of government revenue was being spent on debt servicing.
Sheriffdeen Tella, a professor of economics at the Olabisi Onabanjo University Ago-Iwoye, Ogun,said that the country currently had a debt problem.
Tella said that with the federal government spending about 20 percent of its budget size servicing the country’s debt, it was practically impossible for Nigeria not to have a debt problem.
He called on the government to discontinue borrowing in order to avoid the current situation where a huge chunk of the country’s annual budget was spent on debt servicing.
Tella said, “We have a debt problem because when you have problem with debt servicing, then you have a serious debt problem.
“Currently, what we are still doing is debt servicing using a huge proportion of the annual budget to pay debt. That is serious because the money that you would have used for other things is now being used to pay debt.
“We have a serious problem with debt. We should not even accumulate further debts beyond what we currently owe.”