Goddy Egene and Eromosele Abiodun
The Director General of Debt Management Office (DMO), Dr. Abraham Nwankwo, yesterday said the N1.884 trillion that would be borrowed to fund part of the 2016 budget would be dedicated to capital projects.
President Muhammadu Buhari last week signed the 2016 Appropriation Bill into law after months of delay. Out of the N6.06 trillion, N1.884 trillion would be borrowed from local and international sources.
Speaking at a one-day workshop organised by DMO on ‘Public debt and the challenge of financing Nigeria’s economic recovery’ for Capital Market Correspondents Association of Nigeria (CAMCAN) in Lagos, Nwankwo restated the federal government’s commitment that all money to be borrowed to finance the 2016 budget will be used for capital projects.
“The DMO is committed to making sure that we raise money to fund the 2016 budget deficit from appropriate sources and through appropriate mix during the fiscal year to make sure that capital projects are funded,” he said.
Contrary to fears in some quarters that the country has over borrowed, the DMO boss stressed that the Nigerian debt level was highly sustainable, noting that the nation still had a lot of idle potential, which the administration is striving to harness for effective growth of the economy.
Nwankwo disclosed that while comparative tax revenue to Gross Domestic Product (GDP) ratio of Nigeria is less than 7.0 per cent, its peer group has a ratio of 18 per cent.
He therefore stressed the need to widen the tax net to generate more revenue for the government.
“Nigeria’s debt to GDP ratio is 13 per cent, compared to the 56 per cent of peer group. So in that essence, our debt is still very sustainable. In this respect, I am encouraging all Nigerians to continue to make sure that they pay their taxes fully as and when due because our tax revenue to GDP ratio is relatively low compared to countries in our peer group,” he said.
He said full payment of taxes by individuals and corporate bodies would enhance debt and overall economic sustainability of the country.
Speaking on the economic recession, which he said was caused mainly by unfavourable structural change in the fall of oil prices globally, Nwankwo said the Nigerian government was addressing the challenge through diversified, self-sustaining growth in agriculture and agro processing, solid minerals, manufacturing and information communication technology (ICT).
According to him, in the medium to long term, debt sustainability in Nigeria hinges on the overall sustainability of the economy, and the overall economic sustainability hinges on diversifying the economy in a sustainable manner.
“That is what the government is doing in agriculture, solid minerals, ICT and manufacturing. And to do that, we need a strong infrastructure base and that is why government is spending what it is borrowing on capital projects,” Nwankwo said.