Nigeria’s Minister of Finance and National Budget, Zainab Ahmed, has said that the Federal Government will not make progress unless it borrows more to fund critical infrastructure in the country.
Ahmed spoke on Thursday during the maiden edition of the weekly special ministerial media briefing, organized by the Presidential Communications Team.
According to her, even though the country had expanded its borrowing, it was still below 25 percent debt-to-GDP ratio and within the borrowing limit.
She said; “There is a lot of sensitivity in Nigeria about the level of borrowing by the government and it is not misplaced. And I said earlier that the level of borrowing is not unreasonable, it is not high.”
“The problem we have is that of revenue. So, what we need to do is to increase revenue to be able to enhance our debt to GDP obligation capacity. If we say we will not borrow and therefore not build rails and major infrastructure until our revenue rises enough, then, we will regress as a country. We will be left behind, we won’t be able to improve our business environment and our economy will not grow. So, it is a decision that every government has to take.”
However, her statement was faulted by the former President of Chartered Institute of Bankers of Nigeria, Okechukwu Unegbu, who said the Minster failed to give details of the key infrastructure where the planned new loans will be channeled into.
Unegbu said Nigeria has borrowed so much money and debt service cost has continued to rise. He warned that “without proper naming of the projects to be funded, the loans face the risk of diversion.”
He said no matter what anyone says, Nigeria remains a poor country weighed down by massive debt obligations. He lamented that “from inflation to interest rate, almost all economic indicators are negative.”