The Federal Government’s decision to take a $6.1 billion loan has been said to aid more spending without the need to increase taxes.
This was disclosed by the Senior Special Assistant to the President on Niger Delta Affairs, Senator Ita Enang at the conferment ceremony of the Chartered Institute of Nigeria (CITN).
Enang explained that the other tiers of government added to the rise in Nigeria’s debt stock between 2015 and 2015 and that the Federal Government alone was not to blame.
He said, “Essentially, government borrows so that it can enable higher spending without having to increase taxes. Tax revenues are less than predicted, hence we see sharp rise in government borrowing.
“Borrowing means government can meet a temporary shortfall by borrowing, rather than having to immediately cut back on spending.
“Like an overdraft facility, government borrowing allows for more flexibility and means they can maintain wages and spending commitments without having to keep cutting spending.
“It should be noted that the increase in Nigeria’s debt stock between 2015 and 2018 was due to the borrowings of the three tiers of government, and not the federal government alone.
“Note also that the rising debt was to improve infrastructure and create jobs in Nigeria, where unemployment has been projected to rise to 33.5 per cent, from the current rate pegged at 23.1 per cent.
“This is important to sustain our national debt. The government has been digging up new measures to improve its revenue, one of which is the tax reform.”