President Muhammadu Buhari on Tuesday formally requested the Senate’s approval of a new $6,18 billion (about N2.3 trillion) foreign loan to part-fund the 2021 budget.
The President’s request was conveyed in a letter read at the Red Chamber’s plenary by the President, Senator Ahmad Lawan.
Buhari indicated that the new loan loan, if approved, would be used to bridge the 2021 budget deficit of N5.6trn
According to him, granting of his request would enable the government to fund critical infrastructure projects in key sectors of transportation, health and education, among others.
It would be recalled that in recent times some concerned analysts as well as the International Monetary Fund (IMF) have been expressing serious concerns about Nigeria’s debt-to-GDP ratio, saying that the country’s debt to GDP ratio is not sustainable in view of the economy’s under-performance in the past few years.
However, the Federal Government, through the Debt Management Office (DMO), has consistently dismissed such fears and maintained that at the current rate of below 30 percent to GDP, Nigeria can continue to borrow.
According to the National Bureau of Statistics (NBS) report, as at December 2020 Nigeria’s debt stock stood at about N32.92 trillion, comprising N12.71 trillion (or 38.6%) external debt and N20.21 trillion (or 61.4%) domestic debt.
Analysts further argued that the major challenge with Nigeria’s rising debt stock remained not the debt-to-GDP ratio of less than 30 percent but the debt service payment-to-revenue ratio which is in the region of 60 percent.