President Muhammadu Buhari has in a written communication to the House of Representatives, formally sought for an increase in the 2022 budget deficit to be financed through borrowing from the domestic market.
The move which will further add to Nigeria’s already huge debt profile is coming a few days after the Debt Management Office (DMO) released a schedule of the Federal Government’s N720 billion domestic borrowing plan for the second quarter of 2022.
This disclosure is contained in a letter written by President Buhari to the House of Representatives and read by the Speaker, Femi Gbajabiamila, during plenary on Thursday.
Buhari had also in the letter requested for the review of the 2022 Medium-Term Expenditure Framework (MTEF) upon which the budget was hinged.
What President Muhammadu Buhari is saying in the letter
The letter from Buhari partly reads, “As you are aware Mr Speaker, the new development both in the global economy as well as the domestic economy has necessitated the revision of the 2022 fiscal framework on which the 2022 budget was based.
“The total budget deficit is projected to increase from N965.42 billion to N7.35 trillion representing 3.99 percent of the GDP.
“The increment of deficit will be financed by new borrowings from the domestic market.
“Given the urgency of the request for revision of the 2022 fiscal framework and 2022 budget amendment, I seek the corporation of the National Assembly for expeditious action on this request.’’
The Speaker after reading the letter subsequently referred it to the House Committee on Finance for further legislative action.
What you should know
- Recall that a few days ago, the DMO in schedule titled, ‘FGN Bonds Issuance Calendar for the Second Quarter, 2022’, released a plan of the Federal Government’s N720 billion domestic plan for the second quarter.
- This is coming at a time serious concerns have been expressed by Nigerians, experts and multilateral financial institutions over Nigeria’s rising debt profile, which was put at N39.55 trillion as at December 2021.
- The federal government had in October 2021, hinted of its readiness to secure both local and foreign loans to finance the N6.258 trillion deficit in the proposed 2022 budget.
- Also, the Director-General of DMO, Patience Oniha, had a few days ago, revealed that Nigeria’s rising debt profile was due to increasing budget deficit over the years, although she noted that the ongoing economic diversification and productivity will enable the federal government to reduce its reliance on borrowing to fund its budgetary obligations.