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Thursday, 26 October 2017


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                                                      26 October, 2017   
In all my years of studying finance and economics i have never heard where borrowing to pay debt was thought as a sound practice and method of getting out of debt  but the Federal Government of Nigeria is doing otherwise which makes one the credibility of government officials. 

The Nigeria Minister of Finance, Mrs. Kemi Adeosun, said, yesterday, that the Federal Government would apply US$3 billion been part of the US$5.5 billion currently been sourced fom International Financial Markets in refinancing the legacy debts of the government
The minister, who appeared on Arise TV's news programme, said the proposed $5.5 billion loan was made uMinister of Finance, Mrs. Kemi Adeosun, said, yesterday, that the Federal Government would apply US$3 billion in refinancing the legacy debts of the immediate past governmentp of two components, including refinancing of heritage debts to the tune of $3 billion and new borrowing of $2.5 billion for the 2017 Budget.
She said: "Let me explain the $5.5 billion borrowing because there have been some misrepresentations in the media in the last few weeks. The first component of $2.5 billion represents new external borrowing provided for in the 2017 Appropriation Act to part-finance the deficit in that budget.
"The borrowing will enable the country to bridge the gap in the 2017 budget currently facing liquidity problem to finance some capital projects.
"For the second component, we are refinancing existing domestic debt with the US$3 billion external borrowing. This is purely a portfolio restructuring activity that will not result in any increase in the public debt."

Adeosun further noted that the country's debt surprisingly rose from N7.9 trillion in June 2013 to N12.1 trillion in June 2015, despite the fact that only 10 per cent of the budget was allocated to capital expenditure when oil price exceeded $120 per barrel.

Debt to GDP ratio within reasonable threshold
The minister added: "Nigeria's debt to Gross Domestic Product, GDP, currently stands at 17.76 per cent and compares favourably to all its peers. The debt to GDP ratio for Ghana is 67.5 per cent, Egypt is 92.3 per cent, South Africa, 52 per cent, Germany, 68.3 per cent, and United Kingdom, 89.3 per cent.
"Nigeria's debt to GDP ratio is still within a reasonable threshold. This administration will continue to pursue a prudent debt strategy that is tied to gross capital formation.
"This will be attained by driving capital expenditure in our ailing infrastructure which will in turn, unlock productivity and create the much-needed jobs and growth."

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