The Nigerian Government will be able to incur a debt of N61 trillion as it has raised its borrowing limit from 25 per cent of the Gross Domestic Product to 40 per cent of the GDP.
This is contained in the Medium Term Debt Strategy document prepared by the Ministry of Finance and Budget Planning.
With the country’s GDP put at N152.32 trillion in the National Bureau of Statistics (NBS) report, the country can borrow as much as N61 trillion to fund its budget deficit.
The Senate on Thursday approved a loan request by the Federal Government to borrow $8.33bn and €490m from external sources.
The loans are provided for under the 2018-2020 external borrowing plan of the federal government.
Buhari had transmitted the request to the Senate in May alongside the $6 billion loan that has been approved by the lawmakers.
The loans will be drawn from several lending institutions including; the World Bank, the African Development Bank (AfDB), French Development Agency (AFD), Islamic Development Bank; China EXIMBank, China Development Bank, and European Investment Bank among others.
Buhari stated that the loans will be used for the financing of projects across the six geo-political zones of the country.
“The listed projects form part of the 2018-2020 External Borrowing Plan covered both the Federal and States Governments’ Projects and are geared towards the realization of the Nigerian Economic Sustainability Plan that cut across key sectors such as Infrastructure, Health, Agriculture and Food Security, Energy, Education, and Human Capital Development and COVID 19 Response efforts,” the president said in a letter.
Nigeria’s current debt currently at N33.11 trillion and the new loan approval will further expand the nation’s debt portfolio by up to N27.82 trillion.
The Medium Term Debt Strategy document stated, “The debt limit was increased to accommodate new borrowings to fund budget, issuance of more promissory notes and the proposal to transfer some State Owned Enterprises’ debts, including AMCON to the FGN’s Balance Sheet in line with the IMF’s guidelines, and proposed inclusion of ways and means.
“This limit is provided in Section 12(1) of the Fiscal Responsibility Act (FRA), 2007, and efforts are to be made to ensure compliance, except if in the opinion of the President, there is good reason to exceed the threshold, as further provided in Section 12(2) of the Act.”