2021 Budget: Osinbajo Speaks on the Nation’s Debt

Amidst the rising panic over the nation’s debt, opinions have been expressed concerning the effect of such debt rate on the economy.

Professor Yemi Osibanjo, the Vice-President spoke on Wednesday at a media roundtable to address the issue. He said Nigerians shouldn’t be bothered about the country’s high public debt rate and the means to finance the 2021 budget deficit.

He said the major concerns should be the purpose for which the debts are being used.

‘There is no need to panic over rising debts so long as the loans are used to fund the growth of the economy. Every country has considerable debt challenge and deficit, even the developed economies like the U.S. and UK. What matters is what the debt is used for.

‘A government must have a vision of what it wants to utilize the loans on. Our vision is for the loans to be used on the development of infrastructure that will continue to generate wealth for our people in various ways. That is why we are investing in the development of railway lines and airports for use by present and future generation of Nigerians.’

‘Our vision is to use the loans to fund the productive sector of the economy, particularly manufacturing. We should be confident that the debt will not present any problem for the country, as a lot of the loans are from Nigerians, who buy the government treasury bills and not foreign loans,’ the VP said.

The Vice-President also disclosed to the journalist the progress being made by the Nigerian Economic Sustainability Plan (NESP). The NESP was approved by the Executive Council of the Federation on June with its major responsibility to curb the challenges created by the COVID-19 pandemic.

He said under the NESP, there has been mass sustainability projects, employment creation, food security, and low-income housing. He also disclosed that about five million farmers have been identified, with 1.5 million approved to benefit from the government’s direct support to encourage more people to venture into farming.

He expressed the capacity of the government to manage and utilize the funds from loans to finance the budget deficit.

Based on the analysis made by the Debt Management Office (DMO) last month, the total public debt stock increased by about N2.38 trillion, or $6.593 billion, as of June 30 this year.

The agency said the debt grew from about N28.628 trillion, or $79.303 billion, as of March 31 to over N31.009 trillion, or $85.897 billion.

Zainab Ahmed, the Minister of Finance, who spoke on Tuesday during the public presentation and analysis of the ‘2021 Budget of Economic Recovery and Resilience,’ said the N13.08 trillion proposed appropriation has a total deficit component of about N5.196 trillion.

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The deficit, which adds up to about 3.64 per cent of the country’s gross domestic product (GDP), would be financed through borrowings from domestic and foreign sources as well as loans from multi-lateral and bilateral finance institutions.

Mrs. Ahmed said about N2.14 trillion each would be sourced through loans from domestic and foreign revenue sources, while loans from multi-lateral and bilateral groups would provide about N709.69 billion and N205.15 billion from privatization proceeds.

This, however, is considered by some Nigerians a death trap as there is the high possibility that the government’s target under the NESP to create a financial stimulus for the economy, support micro, small and medium scale enterprises (MSMEs) create more jobs and ensure food security would not be reached.

The DMO figures also show the country’s total public debt profile as of June 30, 2015, shortly after the present administration took over office, stood at about N12.12 trillion, or $63.81 billion.

The debt has risen by over 155.9 per cent under the present administration between June 2015 and March 2020.

However, the Vice President said the country’s current challenge was how to raise revenue in account of the debt service. He said the country’s debt-to-GDP position is good at less than 30 per cent.

He said the government’s intention is to partner with big platform to provide for small and medium scale farmers who access the credits, and in-puts provided through relevant agencies. He disclosed the progress made by the partnership between the Mass Agricultural Scheme and the Central Bank of Nigeria.

On housing, he said the government’s focus is on low cost, and not affordable houses. This will grant Nigerians who earn minimum wage to afford a maximum of N2 million, or N9,000 benefit monthly.

In line with the mass housing scheme, the Vice President said progress is being made in Borno and Nasarawa states. He also said the construction of the building industry would be done by Young Nigerians who are architects and engineers.

‘The government has an ambitious plan to build between 300,000 and one million housing units per state of the federation,’ he said.

He spoke about the government’s achievement under the MSME Funds implemented by the Federal Ministry of Trade and Investment to assist small-scale businesses and the Off-take Guaranty Scheme which was initiated to give government guarantee to those involved in off-taking and distribution of farm produce.

Under the survival fund, he said, the payroll supports small companies with about 10 staff on their payroll. The fund was able to pay such staff with a maximum of N50,000 per month, while 42,000 per state would receive about N32,000 under the scheme.

‘We can create more opportunities and jobs for the people, apart from the ‘Trader Moni’ scheme, which has been lending money to small traders. The Bank of Industry has been able to pay a minimum of N30,000 and up to N200,000 to beneficiaries in places like Lagos and Kano,’ he said.

Peace Omenka

Photo Credit: Guardianng