The Director-General, Debt Management Office, DMO, Dr. Abraham Nwankwo, on Tuesday said the N1.88 trillion will be borrowed in the capital market to finance capital projects.
Nwanko, who spoke at a day workshop on “Public Debt and the Challenge of Financing Nigeria’s Economic Recovery”, organized for Capital Market Correspondent Association of Nigeria (CAMCAN), said that all borrowed money will be used for capital projects.
According to him, the government will borrow N900billion and N984 billion from the external and domestic markets to fund the budget.
He explained that the government is ready to provide infrastructural base for both public and private sectors to thrive, not like in the past where government borrowed money to finance recurrent expenditure.
He said to address the huge infrastructural deficit in the country effectively, the funding implication is massive as about $25bn per annum is needed for the next five to seven years.
Nwankwo said Nigeria’s debt-to-Gross Domestic Product (GDP) ratio as at December last year was at 13.02 per cent, which he said was far below the peer group ratio of 56 per cent.
Explaining further, he said the logic of the mix— external and domestic borrowings, is to rebalance total public stock in favour of less costly external funds, stressing that the utilisation of the borrowing proceeds are entirely on capital projects to support the growth of productive capacity.
the funding implications for Nigeria is about $25 billion per annum over the next five to seven years.
The worry in the funding of such huge infrastructural challenge, the DMO said, lies in private sector equity and debt, which he explained is uncertain as well as public sector revenue and debt which has been adversely affected by declining oil revenue.
To address the imbalance, he said, “The imperative is to depend on well structured, substantial, affordable, long-term external debt financing to fund the desired long-term economic change.”