The Budget Office of the Federation has said it does not make sense to borrow additional monies, adding that Nigeria now has a “limited borrowing
The Budget Office of the Federation has said it does not make sense to borrow additional monies, adding that Nigeria now has a “limited borrowing space” due to its poor debt to revenue ratio.
President Muhammadu Buhari has again asked the National Assembly to approve his request for a loan facility of $800m from World Bank to finance the National Safety Net Programme.
But, Director-General of the Budget Office, Ben Akabueze, while addressing members-elect of the 10th National Assembly at their week-long induction ceremony in Abuja on Wednesday, said Nigeria remains healthy with its debt-to-GDP ratio, “the country is not with its debt-to-revenue ratio.”
He said, ” You may have heard that we have one of the lowest Gross Domestic Products-to-debt ratios in the world. While the size of the FG budget for 2023 created some excitement, the aggregate budget of all the governments in the country amounted to about N30tn. That is less than 15 per cent in terms of ratio to GDP.
“Even on the African continent, the ratio of spending is about 20 per cent. South Africa is about 30 per cent; Morocco is about 40 per cent. And at 15 per cent, that is too small for our needs. That is why there is fierce competition for the limited resources.
“That can determine how much we can relatively borrow. We now have very limited borrowing space; not because our debt to GDP is high, but because our revenue is too small to sustain the size of our debt. That explains our high debt service ratio. Once a country’s debt service ratio exceeds 30 per cent, that country is in trouble and we are pushing towards 100 per cent, and that tells you how much trouble we are in.
“We have limited space to borrow. When you take how much you can generate in terms of revenue and what you can reasonably borrow, that establishes the size of the budget. The next thing would be to pay attention to the government’s priority regarding what project gets what.”
On May 7, 2023, Nigeria’s borrowing from the World Bank had reached $14.34bn as of March 31, 2023.
This was an increase from the $13.93bn debt recorded by the Debt Management Office as of December 31, 2022.
This means that fresh disbursements on approved loans added $410m to Nigeria’s debt from the World Bank in the first quarter of 2023.
The data obtained from the Washington-based bank showed that Nigeria had a debt of $488.66m from IBRD and $13.85bn from IDA as of March 31, 202
It was gathered that the first World Bank loan was acquired in the fiscal year of 1947, according to data from the World Bank.
Since that period, Nigeria has acquired a total of $7.49bn from IBRD and $26.17bn from IDA.
This means that a total of $33.66bn has been borrowed from the World Bank since 1947.
It was also observed that about $7.29bn had been repaid on the loans, with $7.86bn yet to be disbursed by the bank.
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