By Harry Awurumibe, Editor Abuja Bureau
Nigeria’s Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed has poured cold water on the arguments that the Federal Government is on borrowing spree, arguing it is important to borrow to provide developmental projects in the form of roads, rails, bridges, power and water for sustainable development in this country.
This is even as she has disclosed that the the country’s borrowing is still within healthy and sustainable limits.
The Minister who spoke to State House Correspondents after the weekly Federal Executive Council (FEC) held at Presidential Villa, Abuja on Wednesday, insists that the bulk of the borrowed money is used to fund President Muhammadu Buhari’s Legacy Projects such as agricultural value chains, rail lines, roads and bridges projects.
She said: “We have a lot of Nigerians that have taken up agriculture as a business, but apart from agriculture, the President is also rolling out rail lines, some of which had been started several years ago, have been completed. The Lagos/Ibadan rail line is now put to use, we all know about the Abuja/Kaduna and also the Itakpe/Warri rail line has been completed. Work has kicked off on the Kano to Kaduna end of the Lagos/Kano/Ibadan rail line”.
According to her: “Government has been borrowing before this administration and continues to borrow and it is important that we borrow to provide developmental projects in the form of roads, rails, bridges, power and water for sustainable development in this country. If we just depend on the revenues that we get, even though our revenues have increased, the operational expenditure of government, including salaries and other overheads, is barely covered or swallowed up by the revenue.
“So, we need to borrow to be able to build these projects that will ensure that we’re able to develop on a sustainable basis”.
On the much-criticised country’s debt profile, the Minister said: “Nigeria’s borrowing has been of great concern and has elicited a lot of discussions, but if you look at the total size of the borowing, it is still within healthy and sustainable limits. As at July 2021, the total borrowing is 23% of GDP. When you compare our borrowing to … countries, were the lowest within the region, lowest compared to Egypt, South Africa, Brazil, Mexico, the very lowest, and Angola.
“We do have a problem of revenue. Our revenues have been increasing. We just reported to Council that our revenues from non-oil has performed, as July, at the rate of 111%, which means outperforming the prorated budget.
“But our expenditure, especially staff emoluments have been increasing at a very fast rate making it difficult to cope with funding of government. So, what we have to do is a combination of cutting down our cost, as well as increasing revenue to be able to cope with all that is required for government to do, including salaries, pensions debt service, as well as capital expenditure”,
Throwing more light on where the Federal Government is spending the huge amount of money it has been borrowing, Mrs. Ahmed said they are used for President Buhari’s Legacy Projects.
“Mr. President wants to leave, as part of his legacy, an improved agricultural sector. Currently, agriculture sector contributes 23% of the GDP. We have record of expanding the agricultural value chain; we’ve had very little or no processing in agriculture until this administration, we now have a very large number of fertiliser blending plants, about 42, that are operating at full capacity. We also have a large number of rice mills that didn’t exist before”.
“We have a lot of Nigerians that have taken up agriculture as a business, but apart from agriculture, the President is also rolling out rail lines, some of which had been started several years ago, have been completed. The Lagos/Ibadan rail line is now put to use, we all know about the Abuja/Kaduna and also the Itakpe/Warri rail line has been completed. Work has kicked off on the Kano to Kaduna end of the Lagos/Kano/Ibadan rail line”.
“So, Mr. President wants to leave these rail lines. Rail is very important because it is a major means of moving goods across the country. When the rail lines are completed, it will provide much needed relief in terms of movement of goods that our roads now suffer by use of trucks”.
“We are also investing in deployment of major roads. Some of them are completed, some are at various levels of completion. There’s also the 2nd Niger Bridge that is also going to be completed during the tenure of this administration”.
“The major projects that I just mentioned are fully provided for in the budget. The Federal Ministry of Works and Housing has a provision of N388 billion, the Power sector has about N377 billion, the Ministry of Agriculture has N98 billion, the Transportation Ministry has N189 billion. So, all the major projects are being provided for, the target is to make sure that we have some of these key projects completed and commissioned during Mr. President’s tenure:.
“On the crude oil price, you know that the crude oil price in the international capital market is not stable, it goes up and it comes down. Our assessment is that $57 per barrel is a safe zone to be in and we did this after extensive consultations with CBN, we checked the research work of the World Bank and other institutions, whose concern is investigating and researching on crude oil prices. But you know, the revenue in the budget for oil and gas is a function of the level of production as well as the price”.
“We had suffered some setbacks in terms of level of production, occasioned by the limits that the OPEC set, but thankfully, OPEC has changed our quota and that will also soon ramp up. in the event that revenues from oil and gas outperform the budget, there is always the safeguard that the excess goes into the Excess Crude Account. If that happens, we have not witnessed that in the past one and a half years because the revenues have been very cyclical”, the Minister stated.
