President Muhammadu Buhari on Thursday informed the lawmakers of his administration’s decision to borrow N5.01 trillion to finance deficit budget of 2022.
The projected deficit for 2022 budget is pegged at N6.45 trillion.
Other sources meant to finance deficit budget are N90.73 billion from Privatisation Proceeds and N1.16 trillion drawdowns on loans secured for specific development projects.
Buhari in over 30 minutes budget speech before the lawmakers said: “We expect the total fiscal operations of the Federal Government to result in a deficit of N6.26 trillion.
“This represents 3.39 per cent of estimated GDP, slightly above the 3 per cent threshold set by the Fiscal Responsibility Act 2007. Countries around the world have to, of necessity, over-shoot their fiscal thresholds for the economies to survive and thrive.
“We need to exceed this threshold considering our collective desire to continue tackling the existential security challenges facing our country.
“We plan to finance the deficit mainly by new borrowings totalling N5.01 trillion, N90.73 billion from Privatization Proceeds and N1.16 trillion 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 to specific strategic projects and can be verified publicly.
“As you are aware, we have witnessed two economic recessions within the period of this administration. In both cases, we had to spend our way out of recession, which necessitated a resort to growing the public debt. It is unlikely that our recovery from each of the two recessions would have grown as fast without the sustained government expenditure funded by debt.”
