Despite the increase in national debt, the federal government has sought the approval of the National Assembly for an N819.54bn supplementary budget.
The supplementary budget is expected to be financed through domestic borrowing, even with local debt at a record N22.7 trillion.
According to the FG, the supplementary budget which has been presented to the National Assembly will address various infrastructures destroyed by floods across the various states in the country a few months ago.
Investors King understands that the present administration heavily relies on loans and other credit facilities to finance the annual appropriation.
For example, the 2023 budget proposal which has been submitted to the National Assembly has a budget deficit of N10.7 trillion, most of which will be financed by both domestic and external borrowings.
Similarly, the Federal Government has appropriated billions of naira to service debt in 2023.
According to the 2023-2025 Medium Term Expenditure Framework & Fiscal Strategy Paper, the Federal Government further projected that debt servicing to cost N10.43 trillion by 2025.
The letter which was sent by the president to the National Assembly noted that the supplementary budget will be used to complete a number of ongoing projects.
The letter partly read, “The year 2022 has witnessed the worst flood incident in recent history which has caused massive destruction of farmlands at a point already closed to harvest season.
“This may compound the situation of food security and nutrition in the country. The flood has also devastated road infrastructure across the 36 states and the FCT (Federal Capital Territory) as well as bridges nationwide that are critical for the movement of goods and services.
“The water sector was equally affected by the flood and there is a need to complete some ongoing critical projects that have already achieved about 85 percent completion. The nine critical projects proposed in the sector cut across water supply, dam projects, and irrigation projects nationwide”.
Meanwhile, Nigeria’s domestic debt now stands at N22.57 trillion amid the borrowing spree of the Federal Government.
This incessant borrowing has nonetheless worried economists and financial experts who noted that the government should rather cut spending and increase revenue in order to limit both domestic and foreign debt.
