The 2021-2023 medium-term expenditure framework (MTEF) and fiscal strategy paper (FSP) presented before the National Assembly on Tuesday, July 21, revealed that the President Muhammadu Buhari’s led government may have to borrow N4.28 trillion to fund its budget deficit in the coming year.
According to the government, as revealed by the document, it will not be feasible to retain budget deficits within the 3% target set in the Fiscal Responsibility Act 2007.
Naija News understands that the total budget deficit of the proposed N12.66 trillion 2021 budget is N5.16 trillion, up from N4.98 trillion in the revised 2020 budget.
The document reads in part, “This represents 3.62 per cent of estimated GDP, well above the threshold of three per cent stipulated in the Fiscal Responsibility Act,”
“Unless we can find new revenue sources, given the limited scope of cost-cutting, it will not be feasible to keep budget deficits within the three per cent target set in the Fiscal Responsibility Act 2007.”
It further revealed that funds for the project will be provided by both foreign and domestic loans of N4.28 trillion, N205.15 billion from privatisation proceeds, and as well as N674.11 billion drawdowns on existing project-tied loans.
“The projected debt service to revenue ratio will be 47 percent,” the document revealed while the government also noted that it “raises some concern about debt sustainability”.
“However, it is indicative that the country is faced with a serious revenue problem rather than a classic debt problem, efforts must, therefore, be geared towards tackling the revenue problem so it does not degenerate to a real debt sustainability issue.”
Meanwhile, Naija News reported earlier that a global standing instruction (GSI) guidelines published by the Central Bank of Nigeria (CBN) yesterday has made it possible for banks to debit the accounts of loan holders in other banks to settle defaults.