Nigerian government’s borrowings derive from perennial budget deficits, the debt office said on Wednesday.
Patience Oniha, the Director-General of the Debt Management Office (DMO) made the disclosure while addressing journalists in Abuja, saying the country’s economic crisis had made borrowing unavoidable.
Oniha noted that even the governments of advanced economies borrow, adding that appropriate deployment of the borrowed fund should rather be what matters most.
“I am sure you know how indebted the United States (US) is. Even when the Congress or the Senate says it will not approve it because the borrowing is too high, after one or two days, they settle because they know that government must run.
“The fact that some governments run on borrowing does not mean that borrowing is wrong. So the US borrows, the UK (United Kingdom) borrows, France borrows, Germany borrows.
“Many countries borrow – be it Russia, be it Qatar- all those countries that have oil and so have huge Sovereign Wealth Funds – they borrow. The point I am making here is that borrowing is not wrong.”
The DMO head stated that nations with surplus budgets could even decide to borrow if it plans to keep its financial markets open.
According to her, it is imperative for government to borrow so as to keep the market open for the private sector to operate considering its significance to economic growth.
“The issue is why do we borrow, and this is where I give a charge to journalists and others. Every year you see us prepare a budget. In the budget, you see all the items, you see the personnel cost, capital expenditure, you see revenue projections, you see deficit. The deficit means our revenue is less than our expenditure.
“So if there is deficit, how do you finance that deficit? You borrow or undertake assets sale. You see the new borrowings, you see domestic, you see external. It starts from there. Our borrowing sticks out because our revenue is very low,” Mrs Oniha said.
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