From now till December 31, 2019, Nigeria will raise its domestic debt profile by N802. 82 billion to support the 2019 budget implementation which would elapse in barely 64 days, Debt Management Office (DMO) has said.
On the other hand, it would shelve planned borrowing from the international debt market- Eurobond, for the budget, since 2019 appropriation had turned out to be a six-month fiscal operation.
With the presentation of the 2020 budget proposals and the pledge by the lawmakers to give the document accelerated approval by mid-December, the 2019 budget signed five months ago would end.
Director-General of DMO, Ms Patience Oniha, who made the disclosures, said there were time constraints before the end of the 2019 budget cycle, as Federal Government wants to start its budget implementation for 2020 in January.
2019 budget plans had included foreign borrowing at N824.82 billion ($2.7 billion) and domestic borrowing of N802.82 billion.
“We will only raise the new domestic borrowing of N802.82 billion naira as provided in the 2019 Appropriation Act. We won’t be in the international capital market in 2019,” she said.
DMO, had in June, said government wanted to first access cheap funding from multilateral and bilateral lenders and then, raise any balance from commercial sources, possibly through security issuances such as Eurobonds.
But the Lead Director of Centre for Social Justice, Mr Eze Onyekpere, said the sustained contradiction between the Federal Government’s mantra of cutting down waste, improving efficiencies and removing ghost workers from the payroll on the one hand and its relationship with the rising recurrent non-debt expenditure were indicting.
He noted that the situation was fuelling the series of borrowing by government, not necessarily for development projects, which continue to elude the country and starve entrepreneurs of the needed infrastructure to thrive.
“The deficit was recorded at a time not a single kobo has been spent of capital expenditure for the year. Already, the extent of the proposed deficit financing for 2020 is raising very critical challenges. It is like sinking further into a slippery hole.
“Actual recurrent non-debt expenditure was N2.511trillion in 2016, N2.76 trillion in 2017 and N3.103 trillion in 2018. For the half year in 2019, it has reached N2.050 trillion, which is 21 per cent more than the pro-rated value of recurrent non-debt expenditure in the 2019 budget.
“Even though a new minimum wage is kicking in, efforts should be made to reduce the cost of governance through the implementation of fit and good practices contained in the Oronsaye Committee Report on restructuring of federal MDAs.”
Nigeria, which emerged from recession in 2017, has borrowed abroad and at home over the past three years to help finance its budgets and fund infrastructure, but debt servicing costs are also rising.
President Muhammadu Buhari, earlier this month, presented a record N10.33 trillion ($33.8 billion) budget for 2020 to the National Assembly, which he expects to be partly financed by foreign and domestic borrowings, as well as proceeds of privatisation.
The proposal represents an 11 per cent increase when compared to the 2019 appropriation of N9.12 trillion, with retained earnings estimated at N8.155 trillion, leaving a deficit of N2.18 trillion, which represents 1.52 per cent of the nation’s Gross Domestic Product (GDP).