Borrow to finance budget deficits, critical infrastructure inevitable – FG – Blueprint Newspapers Limited
Despite the country’s huge debt profile, the federal government has justified continued borrowing, noting that it is crucial to fund budget deficits and critical infrastructure.
The Director General of the Debt Management Office (DMO), Patience Oniha, said this in an interview with the News Agency of Nigeria (NAN) on Thursday in Lagos.
Oniha said government borrowing was done by all countries around the world, mostly to fund critical infrastructure.
DG DMO further clarified that advanced countries are also resorting to borrowing to stimulate their economies.
“The issue of debt has become topical in Nigeria. Sometimes it almost seems like borrowing is a misdemeanor or a crime.
“The first thing we need to understand is that countries around the world are borrowing, whether it’s poor countries, advanced countries, developed countries, emerging markets. They all borrow.
“We usually hear complaints that debt levels are rising in Nigeria. Globally, debt levels are rising, not just in Nigeria,” she said.
The CEO said that the advent of COVID-19[female[feminine had also made borrowing imperative for some countries.
“What happened with COVID-19 is that countries had to spend more, not only for health needs but also for social needs, because we have to take care of people who lose their jobs.
“We need to create incentives for the private sector to keep functioning to avoid a big recession, because most countries have had a recession.
“We did that too, but we got out of it after two quarters. Public spending is one of the tools you can use properly to get out of a recession.
“In Nigeria, we borrow to finance budget deficits, sometimes we borrow to finance specific projects and services like railways and airports. Infrastructure financing is a saving in itself. It creates jobs in all sectors.
“We also borrow to fund maturing loan obligations like Federal Government of Nigeria (FGN) Bonds and Nigeria Treasury Bills,” she said.
The DMO had recently said that the country’s total outstanding debt as of December 2021 was N39.55 trillion.
He also said the debt stock is likely to reach 45 trillion naira in 2022 as the government plans to borrow an additional 6.39 trillion naira to finance the 2022 budget deficit.