President Muhammadu Buhari on Thursday said that though Nigerians have the right to be concerned about the nation’s additional loans, still, the country’s debts remain at a sustainable level.
The President stated this while presenting the 2022 budget estimates to the joint session of the National Assembly.
According to him, “Despite our revenue challenges, we have consistently met our debt service commitments”.
He adds that “Some have expressed concerns over our resort to borrowing to finance our fiscal gaps. They are right to be concerned.
However, we believe that the debt level of the Federal Government is still within sustainable limits”.
President Buhari further noted that the additional loans were meant to complete ongoing critical infrastructure projects across the country.
The President explained that the nation has witnessed two economic recessions within the period of his administration.
Buhari asserted that in both cases, the government spent its way out of recession, which necessitated a resort to growing the public debt.
He, however, stressed that it is unlikely that “our recovery from each of the two recessions would have grown as fast without the sustained government expenditure funded by debt”.
Speaking further about the debts, the President said the administration’s target over the medium term is to grow the country’s Revenue-to-GDP ratio from about 8 percent currently to 15 percent by 2025.
“At that level of revenues, the Debt-Service-to-Revenue ratio will cease to be worrying. Put simply, we do not have a debt sustainability problem, but a revenue challenge which we are determined to tackle to ensure our debts remain sustainable,” the President assured.
He emphasized that the borrowings are to finance critical development projects and programmes aimed at improving Nigeria’s economic environment and ensuring effective delivery of public services to “our people”.