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Nigeria needs N34.6tr fund for infrastructure in 7 years – DMO

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The Debt Management Office (DMO), which oversees Federal Government’s debt issuance programme, has estimated that Nigeria needs $25 billion, about N4.9 trillion, annually for the next seven years to fund the nation’s infrastructure development.

Director General, Debt Management Office (DMO), Dr. Abraham Nwankwo, said the country needs about $175 billion, equivalent to N34.56 trillion, over the next seven years to fund its infrastructure development.

Nwankwo spoke on Tuesday at a one-day workshop organised by DMO on “Public Debt and the Challenge of Financing Nigeria’s Economic Recovery” for Capital Market Correspondents Association of Nigeria (CAMCAN) in Lagos.

In the 2016 budget, the Federal Government plans to raise N900 billion from external sources and N984 billion from the domestic capital market, totaling N1.884 trillion.

Nwankwo said the Federal Government would commit the entire N1.884 trillion it plans to raise in debt financing this year to capital projects.

He said the net proceeds from government’s external and domestic fund raising would entirely be used for the development of specific capital projects outlined in the national budget.

He noted that Nigeria’s infrastructural development agenda requires large capital outlay that could only be achieved by striking appropriate mix of internal funding and debt, pointing out that debt financing, rather than being a burden, could be a veritable source of stimulating economic growth when such funds are utilised for development of key priority projects.

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According to him, Nigeria’s debt level is highly sustainable as the nation still has a lot of idle potential, which the government is currently working to harness for effective growth of the national economy.

He pointed out that having developed its domestic bond market as a vibrant alternative; Nigeria now has some level of comfort to raise funds from the global markets at competitive terms.

“The debt to GDP ratio is 13 per cent, compared to the 56 per cent of peer group.  So in that essence, our debt is still very sustainable. The DMO is committed to making sure that we raise money to fund the 2016 budget deficit from appropriate sources and through appropriate mix during the fiscal year to make sure that capital projects are funded,” Nwankwo said.

He noted that with the national revenue deeply undermined by the collapse of the crude oil price and the uncertainty in private sector funding, the imperative for the national development is to depend on well-structured, substantial, affordable, long-term external debt financing to fund the desired long-term economic change.

He said the DMO would consider the best and amenable external sources in its fund raising in line with Nigeria’s long-term economic development agenda.

Nwankwo however urged Nigerians to support the government by paying their taxes noting that Nigeria is still far below its peers in terms of tax revenue.

According to him, while comparative tax revenue to GDP ratio of Nigeria is less than 7.0 per cent, its peer group has a ratio of 18 per cent, underlining the need to widen the tax net to generate more revenue for the government.

 

 

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