Nigeria's Minister of Finance, Mrs. Kemi Adeosun, on Thursday, January 19, told journalists that Nigeria may be unable to meet its obligations if it does not borrow the planned $30bn loan.
It's Either Nigeria Borrows $30 Billion Or Sink - Kemi Adeosun Explains
Adesosun said the government incurs a huge monthly personnel expenditure of about N210 billion in addition to its debt servicing burden of up to N120 billion, the Punch reports.
She explained that with the drop of revenue from oil – the country’s main export, the government does not make enough money to fund capital projects. The minister was speaking during the 14th Daily Trust Dialogue, which had as its theme: ‘Beyond recession: Towards a resilient economy’.
The Senate had on November 1, 2016 unanimously rejected President Muhammadu Buhari’s 2016-2018 external borrowing rolling plan. The legislators demanded more details about the plan from the executive.
The budget has a huge deficit of N2.36tn (or 2.18 per cent of the country’s Gross Domestic Product), a figure the President said would be financed through borrowing.
Adeosun said if the country is to survive the recession, it has not other option than to adopt the $30bn loan.
She said, “Where are we today and what’s the problem? This is my requirement every month: salaries, statutory transfers every month, I need N210bn every month. Debt, not the debt that we are planning to take, but the inherited debt; I need N120bn just to service it. So, every month, I need N330bn
“Just to give you an idea of where we are today, last month’s FAAC allocation was N310bn. So, the Federal Government got about N140bn; but I must cover N330bn a month before we can do a single capital project.
“So, when we start the argument, should we borrow, should we not? The truth is that we have no choice. If you are waiting for the oil price to recover, the prognosis is that it’s not going to go back to $110 per barrel any time soon.”
Adeosun added that in order to get the economy growing, Nigeria had no choice but to look for low-cost funds and put infrastructure in place, because infrastructure is the one thing that will unlock the economy. It is infrastructure that would allow us to have the cows in Taraba State with huge potential, rather than importing powdered milk.