According to the Debt Management Office (DMO), the nation’s borrowing to cover budget shortfalls and infrastructure is not always negative.
Patience Oniha, the Director-General of DMO, stated this in a Thursday interview with the News Agency of Nigeria (NAN) in Lagos.
She addressed the sides of a security issuance awareness session organized by her office.
According to Oniha, all governments across the world borrow money from the government to mostly fund infrastructure.
According to her, the multiplier benefits of good infrastructure on a country’s economy are impossible to quantify.
She stated that successive Nigerian administrations had had to borrow to pay budget deficits and that yearly budgets would suffer if monies were not generated to maintain them.
“The issue of debt has become so prevalent in Nigeria that it sometimes appears as though borrowing is an offence or a crime.”
“The first thing we must realize is that governments all across the globe borrow; whether they are poor, advanced, developed, or rising markets.” They are all borrowers.
“In Nigeria, we frequently hear reports that debt levels are growing. “Not only in Nigeria, but globally, debt levels are growing,” she remarked.
According to the director-general, the introduction of COVID-19 has also made borrowing necessary for several nations.
“What occurred with COVID-19 was that nation needed to spend more, not just on health requirements, but also on social needs; since we need to care for individuals who are losing their employment.”
“We must provide incentives for the private sector to continue working to prevent a major recession, as other nations have suffered.”
“We did well as well, but we only lasted two quarters. Government expenditure is one of the options available to help you get out of a slump.”
“In Nigeria, we borrow to finance budget deficits; sometimes we borrow to finance specific projects and services like railways and airports. Financing infrastructure is an economy itself. It creates jobs across all sectors.”
“We also borrow to fund maturing loan commitments such as Federal Government of Nigeria (FGN) bonds and Nigeria Treasury Bills,” she explained.
Existing statutory measures, she claims, limit government borrowings at various levels and ban abuse of the process.
“According to the Fiscal Responsibility Act, borrowing should be used for capital and human capital development. The DMO Act is quite explicit, particularly about foreign borrowings.”
“No government agency can borrow on its own. It must adhere to those criteria and be approved by the Federal Executive Council and the National Assembly.”
“There is also a budgetary obligation for state governments to guarantee that the changes at the centre are also implemented in the states,” she explained.