President Muhammadu Buhari-led government on Monday revealed that its borrowing due to the effect of Coronavirus on Nigeria’s revenue profile.
The Director-General of the Debt Management Office, Patience Oniha, while stating the reason for the Federal Government’s action noted that the proposed new 2020 budget of N10.51tn now has a deficit of N4.56tn.
She stated this on Monday during her presentation before the Senate Committee on Foreign and Local Debts.
Mrs Oniha further stated that the deficit in the 2020 budget would be financed by the All Progressives Congress-led administration through domestic borrowing of N2.19tn and external borrowing of N1.98tn, amounting to N4.17tn.
She said, “The revision of the 2020 budget became necessary due to the effects of COVID-19 on Nigeria’s revenues and the need for new (previously unbudgeted) spending on health to meet the health challenges occasioned by COVID-19.”
“The subsisting 2020 Appropriation Act had a total expenditure of N10.59tn and a deficit of N2.18tn to be part-financed through new domestic borrowing of N744.98bn and new external borrowing of N850bn.”
“The N850bn new external borrowing, which was to be raised through Eurobonds has been converted, with the approval of the National Assembly, to domestic borrowing due to lack of access to the international capital market at this time. Thus, the total new borrowing, which is all domestic, is N1.59tn.”
“The proposed new domestic borrowing of N2.19tn will be raised from the domestic market through the issuance of Federal Government of Nigeria Bonds, FGN Savings Bonds, Sukuk, Nigerian Treasury Bills and possibly, a Green Bond. As of May 29, 2020, a total of N1.32tn had been raised. There is also an ongoing offer for Sukuk of N150bn.”
However, the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, promised Nigerian’s that stimulus package put in place by the Federal Government would reduce the effects of the Coronavirus in the country.
Ahmed further stated that 77 per cent of the newly proposed revenues from the various sources such as the Nigerian National Petroleum Corporation, the Federal Inland Revenue Service and the Nigerian Customs Service was for debt serving.