The Director General of the Debt Management Office (DMO) Patience Oniha has justified Nigerians borrowing spree saying most countries borrow to survive.
Oniha who held a media parley on Wednesday in Abuja declared that Nigeria is not the only country that borrows loans to fund budget and projects.
Her words, “Other countries both advanced economies and developing countries also borrow to run the economy. You know that even America as the foremost country in the world also borrow to run their economy.
“Countries such as China, Britain, France, Japan, Ghana and other countries do borrow. Government can borrow to keep the financial market open and to help the private sector thrive.”
She pointed out that apart from asset disposal, borrowing is one of the major revenue sources to finance budget in many countries.
“Once there is deficiency in the budget there must be borrowing to close the gap,” she said.
Oniha explained that when the country was earning hugely from crude oil export, there was still need to borrow to finance projects. And those points to the fact that now that the COVID: 10 crises have crashed the oil price in the international market, it is obvious that the country needs to borrow in order to sustain economy and finance the budget.
The DMO boss pointed out that there are loans tied to project, such as World Bank loan, Islamic, AfDB and other multilateral institutions otherwise known as concession loans.
“Fiscal responsibility Acts allows us to borrow on concession for projects but it requires the approval of the national assembly.” She stated. She said that Budget for road construction in the 2020 revised budget was N200 billion which cannot go far in tackling needs for road construction, so that makes concession loan imperative.
Ms Oniha further stated that after Nigeria’s exit from Paris Club loans, there was caution against going for external loans, so Government was borrowing domestically to finance budget until it got to a point that government realized that it was very costly.
Also, government has to shift to external borrowing in order not to crowd out the private sector otherwise government continuous dominating domestic borrowing would not allow private sector to survive.
According to her, the satisfaction derived in the going for external borrowing was that it opened door for banks and other private sector to borrow.