The National Assembly is being asked to approve a fresh N819.54 billion extra budget that the Federal Government intends to pay through domestic borrowing. According to the request, the N819.5 billion additional budget for the 2022 fiscal year was submitted by Buhari to the National Assembly on Wednesday for approval. It is intended to be used by the Federal Government to repair various infrastructure damaged by the recent floods in the country.
The extra budgetary expenditure is intended for the 2022 budget’s capital spending component, resulting in a rise in the deficit to N8.17 trillion.
The letter from the President, Muhammadu Buhari, requesting the approval from the National assembly explained that at a time when harvest season had already ended, the year 2022 saw the worst flood catastrophe in recent memory, resulting in the catastrophic damage of farmlands. This might make the nation’s nutrition and food security problems worse.
In addition to the 36 states and the Federal Capital Territory, the flood has destroyed bridges across the country that are essential for the transportation of goods and services. The flood had an equal impact on the water industry, and there is a need to finish some existing vital projects that are already around 85% complete. The sector’s nine important projects include national projects for irrigation, dam construction, and water supply.
The President further explained that he has approved a N819.536 billion additional budget for 2022, which is entirely made up of capital expenditures. The supplementary would be paid for by additional domestic borrowings, increasing the deficit in the budget for 2022 to N8.17 trillion and the ratio of the deficit to GDP to 4.43 percent.
The latest projected N819.54 billion in domestic debt is expected to bring the total domestic borrowing for the Federal Government to N3.33 trillion by 2022. The domestic debt stock of the Federal Government was N19.24 trillion as of December 2021 and rose to N21.55tn as of September 2022, according to data from the Debt Management Office.
The World Bank had expressed concern about Nigeria’s public debt due to the escalating debt service-to-revenue ratio. By the end of 2022, the debt service to revenue ratio may be at 102.3%, according to the World bank and this situation may further spiral inflation and cost of living for the citizens, thus worsening the already mountain high poverty situation in the country
In addition, the President is seeking the approval of the National Assembly to securitize Ways and means balances of N23.72 trillion into 40 year bond with three years moratorium on principal repayment and interest rate at 9% per annum.
When approved by the National Assembly, this will raise the national debt stock by 54% and thus placing more pressure on public finances and spending.
The request from the president has been referred by the senate to its committees on Appropriation, Finance, works, water resources, and Agriculture. The Senate President, Ahmad Lawan, explained that the committees must work on the requests and make sure that the national Assembly adheres to the proper procedures. And in order to ensure that the National Assembly have the correct information to deliberate on the proposals, he stated that the Minister of Finance, the Central bank of Nigeria, the Minister of Agriculture, the Minister of Water Resources, and the Minister of Works, are to be invited and are to make themselves available to the committees and the senate.