The Minister of Finance, Kemi Adeosun has set alarm bells off after she remarked that Nigeria will no longer borrow to fund the budget, indicating that the planned $2 billion world bank loans might no longer be required.
According to Reuters, she made this remark while speaking at a business forum in Abuja, suggesting that Nigeria will no longer seek such loans, or an additional $1.5 billion it had planned to raise from international debt markets.
“We cannot borrow anymore, we just have to generate funds domestically enough to fund our budget. Mobilize revenue to fund the necessary budget increase,”
What this could mean?
A few theories
- The government has given up on borrowing in foreign currency
- They have already borrowed enough for the year considering their reliance on ways and means
- There is a lot more to panic about the Nigerian economy that we probably do not know yet
- They really do believe in their plans to widen the tax net.
- She doesn’t know what she is talking about or was quoted out of context
Nigeria currently has a total debt of about N19 trillion out of which about N1.8 trillion was added in the first 3 months of this year alone. The government was also successful in accessing the foreign bond market via Eurobonds and its diaspora bond offerings. Nevertheless, debt service to revenue ratio is at a whopping 62% of last year’s revenue and threatening to jump start another wave of economic turmoil.