Reasons for debt profile increase – Fed Govt

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Mrs. Zainab Ahmed the Finance, Budget and National Planning Minister has given the reasons behind Federal Government acquisition of loans.

According to the minister, the loans would aid the funding of projects across the country.

Her explanation came on the heels of criticisms that the government was borrowing too much.

The debt stock is set to hit N52.6 trillion when the government harvests all the loans already approved by the National Assembly and the debts written against the government by its creditors, including the Central Bank of Nigeria (CBN).

The President Muhammadu administration got the latest nod on Wednesday to take more loans with the Senate granting approval to $16 billion and one billion euro loan request as well as $125 million grant.

Speaking on Channels television, the Finance minister said the justified the government’s attraction to the loans because of their concessionary nature.

She stated that the juicy loans come with Interest Rates of 2.5 to three per cent per annum; 20 to 30 years repayment tenor and Grace Period (Moratorium) of Seven years.

These concessions the minister said allows the federal government to execute infrastructure projects across the country.

Asked if the government will toll some of these roads in order to recoup investments to pay back the loans, Mrs. Ahmed noted that plans are underway to toll some roads which will come with the added benefit of smooth and fast transportation between locations which in turn will accelerate business growth within and among states.

Already, bids are being received for 14 major roads that will be tolled. According to the minister, “Government does not expect immediate financial returns from infrastructure completed with loans”.

READ ALSO: Reason why FG Assigned 86% Of 2021 Supplementary Budget To Security – Ahmed

She attributed the current high price of food stuff to the deplorable state of many roads in the country which in turn have led to high cost of transportation.

Mrs. Ahmed also revealed that the government is under “a lot of pressure to remove subsidy”.

The prevailing subsidy arrangement, according to her, favours the rich and those with two cars or more that can afford to buy petrol when the subsidy is removed.

To cushion the effect of the subsidy removal, the minister said the government was considering palliatives for “a large number of the population”.

She listed some of the palliatives as provision of an efficient, effective and affordable mass transportation system, and a social welfare package that will allow the government to reach out to the needy.

However, the government is handicapped in reaching out to the needy because of the poor national identity database.

The minister also stated that the government has been spending from recovered loot.

She said recovered loots are domiciled in a Special Recovery Account and based on the advice of the Attorney-General of the Federation and Minister of Justice as well as from financial crimes agencies, “unencumbered” funds are withdrawn from the special account and transferred to the Consolidated Revenue Fund from where the money is spent of overhead expenses.

On the face-off between the federal and state governments over Paris Club refund, the minister said efforts are on “towards an out of court solution” to the impasse.

She also assured Nigerians that there was no friction between fiscal and monetary authorities.

Mrs. Ahmad said her ministry works harmoniously with the CBN governor even when “there might be some areas of disagreement”.

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