Nigeria's minister of finance, Kemi Adeosun, has said the country has no other choice than to turn to international financial institutions for loans to finance critical infrastructure projects.
Adeosun on Thursday, January 19, at the 14th Daily Trust Dialogue, said this is following the inability of the federal government to generate enough revenue to meet its obligations.
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 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.
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: “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.”
“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."
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.
Recall that in November 2016, the Senate had unanimously rejected 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.
Meanwhile, the Nigerian Senate has approved the Medium Term Expenditure Framework (MTEF) of President Buhari’s executive arm of government in readiness for the passing of the 2017 budget.
The senators during plenary on Wednesday, January 18 approved all the recommendations of the report by the joint committees on Finance, Appropriations and National Planning on the MTEF and the Fiscal Strategy Paper (FSP) including projected revenue as well as exchange rate of N305 to a dollar.