Nigeria’s domestic debt increased to N22.57 trillion on Wednesday, as the Federal Government presented a last-minute supplementary budget for the fiscal year 2022.
The President, Major General Muhammadu Buhari (retd. ), is requesting National Assembly approval for a N819.54 billion supplementary budget, which he intends to fund through domestic borrowing.Information Guide Nigeria
Buhari on Wednesday submitted to the National Assembly for approval a N819.5 billion extra budget for the fiscal year 2022 to repair critical infrastructure damaged by floods in several states across the country a few months ago.
The additional budget, as explained by the President in a letter read in plenary by Senate President Ahmad Lawan, is intended for the capital spending component of the 2022 budget, with a corresponding increase in the deficit to N8.17 trillion.
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The letter read, “The year 2022 has witnessed the worse flood incident in recent history which has caused massive destruction of farmlands at a point already closed to harvest season.
“This may compound the situation of food security and nutrition in the country. The flood has also devastated road infrastructure across the 36 states and the FCT (Federal Capital Territory) as well as bridges nationwide that are critical for the movement of goods and services.
“The water sector was equally affected by the flood and there is a need to complete some ongoing critical projects that have already achieved about 85 percentage completion. The nine critical projects proposed in the sector cut across water supply, dam projects, and irrigation projects nationwide.
“I have approved a supplementary budget of 2022 appropriation of N819.536bn, all of which are capital expenditures. The supplementary will be financed through additional domestic borrowings which will raise the budget deficit for 2022 to N8.17tn and deficit to GDP ratio to 4.43 per cent.”
Being a proposal submitted 10 days before the New Year, the Senate President expeditiously moved it to the Appropriations, Finance, Works, Water Resources, and Agriculture Committees.
Initial plans called for the Federal Government to borrow N5.01tn (with domestic debt estimated at N2.51tn) to finance a portion of the N6.26tn budget shortfall.
The Federal Government’s domestic borrowing is projected to reach N3.33 trillion in 2022, based on the newly planned N819.54 billion domestic debt.
As of December 2021, the Federal Government’s domestic debt stock was N19.24tn, according to data from the Debt Management Office.
By September 2022, the domestic debt stock had climbed to N21.55tn, meaning the Federal Government had borrowed a total of N2.31tn.
With the increased borrowing of N819.54 billion, the Federal Government may still handle N1.02 trillion in domestic debt in accordance with its strategy.
The Federal Government’s domestic debt increased from N8.4tn in June 2015 to N21.55tn in September 2022, as reported by The PUNCH.
This represented a growth of N13.15 trillion or 156.55% under Buhari.
According to the proposed budget for 2023, The PUNCH recently revealed that the Federal Government planned to spend N4.5tn on interest payments on domestic debt by 2023.
This is a 243.51 percent increase from the anticipated allocation of N1.31 trillion for domestic debt interest in 2016.
In its most recent Africa’s Pulse report, the World Bank described Nigeria’s growing debt service-to-revenue ratio as worrisome.
According to the bank, the ratio of debt payment to revenue might reach 102,3% by the end of 2022.
Recently, while presenting the 2023 appropriations bill to a joint session of the National Assembly, President Major General Muhammadu Buhari (ret.) remarked that despite the country’s financial issues, it has continuously honored its debt servicing obligations.
“Despite our revenue challenges, we have consistently met our debt service commitments. Staff salaries and statutory transfers have also been paid as and when due,” Buhari added.
However, speaking at the launch of the World Bank’s Nigeria Development Update titled, ‘The urgency for business unusual,’ held recently in Abuja, the Finance Minister, Zainab Ahmed, had admitted that Nigeria was struggling to service its debt.JAMB portal
She said, “Already, we are struggling with being able to service debt because even though revenue is increasing, the expenditure has been increasing at a much higher rate, so it is a very difficult situation.”
Meanwhile, President Major General Muhammadu Buhari (ret.) has submitted to the National Assembly a request for approval of N23.7tn in Ways and Means Advances reorganization.
President of the Senate, Ahmad Lawan, and Speaker of the House of Representatives, Femi Gbajabiamila, read Buhari’s plea to their respective chambers’ members during Wednesday’s plenary sessions.NYSC portal
In the request titled ‘Restructuring of Ways and Means Advances,’ the President wrote, “The Ways and Means Advances by the Central Bank of Nigeria to the Federal Government has been a funding option to the Federal Government to cater for short-term or emergency finance to fund delayed government expected cash receipt of fiscal deficit.
“The Ways and Means balances as of 19th December, 2022, is N23,719,703,774,306.90. I have approved the securitisation of the Ways and Means balances along the following terms: amount, N23.7tn; tenure, 40 years; moratorium on principal repayment, 3 years; pricing interest rate, 9 per cent. Your concurrence and approval is sought to allow for the implementation of the same.”
Gbajabiamila forwarded the request to the House Committee on Aids, Loans, and Debt Management, while Lawan forwarded it to the Senate Committee on Finance for a Thursday report.
The Senate President stated that Buhari’s request for a N819.5bn additional budget for 2022 would be discussed and approved along with the 2023 Appropriations Bill on Thursday.
Lawan said, “We are referring these letters to our committees on Appropriation, Finance, works, water resources, and Agriculture today.
“They have to work on it and ensure that we follow the due processes. In that respect, the Minister of Finance, the CBN; Ministers of Agriculture, Water Resources and Works, are to be invited and make themselves available for this process and to ensure that we get the right information between today and tomorrow.
“Tomorrow (Thursday), by the grace of God, will be the last legislative day for the 9th Senate this year. It will be quite busy for us because we have to receive the report of the 2023 Appropriation Bill from our Committee on Appropriations.JAMB Result
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