The Federal Government has secured a €64.7 million loan which it says would be used to provide potable water in Kano, as part of the plans towards key infrastructural reforms in the country.
The Minister of Finance, Zainab Ahmed, said this on Wednesday while briefing journalists after the Federal Executive Council meeting at the Presidential Villa.
The World Bank, through its Vice President for Africa, Mr. Hafez Ghanem, urged the Federal Government to reduce its borrowing and tap private investments that will yield multiplier effects on many sectors of the economy. Although Nigeria’s current Debt-to-GDP ratio is 20 percent, it is within the acceptable global threshold of 56 percent. We agree with Ghanem that the best option for the Nigerian government is to channel more investments to fund development needs. His warning that excessive borrowing without proper utilisation of the loans could pose multiple economic challenges in future is also timely.
At the moment, the Federal Government plans to borrow N1.63 trillion to finance N1.950 trillion deficits in the 2018 budget. It had already borrowed N5.8 trillion in three years to fund staggering budget deficits. For instance, between January and June 2016, borrowing from the domestic market to augment shortfalls in revenue, was N600bn, according to government’s 2017-2019 Medium Term Expenditure Framework. In addition, a loan of $1bn was obtained from African Development Bank (AfDB) to bridge the 2016 budget deficit.