Nigeria will use almost a fourth of its 2020 budget to settle local and international debts owed by the government.
On Tuesday, President Muhammadu Buhari presented the National Assembly with a spending plan of N10.3 trillion, making next year’s proposed budget the highest ever in the country.
Mr Buhari said his government will spend N2.5 trillion of that total on debt servicing.
At the end of March 2019, Nigeria’s debt stood at N24,947 trillion (USD 81,274 billion), according to figures released by the Debt Management Office.
The budget, he says, is aimed at “strengthening the country’s macroeconomic environment, human capital development, critical infrastructure and the enhancement of the administration’s social investment programme”.
With a projected GDP growth of 2.9 percent and an anticipated one-digit inflation rate, N8.2 trillion is predicted as total revenue from the Federal Government in 2020.
It includes N2.6 trillion as revenue from oil, N1.8 trillion from non-oil tax revenue, and N3.7 trillion other revenue.
“Debt service is estimated at N2.45 trillion, and provision for Sinking Fund to retire maturing bonds issued to local contractors is N296 billion,” President Buhari said.
Certain FG budget figures include N556.7 billion statutory transfers, N4.88 trillion non-debt recurring spending, and N2.14 trillion capital spending (excluding the capital portion of statutory transfers).
Mr Buhari said that the huge debt payment provision is to record the willingness of the government to fulfill its obligations.
“Of this amount, 71 per cent is to service domestic debt which accounts for about 68 per cent of the total debt. The sum of N296 billion is provided for the Sinking Fund to retire maturing bonds issued to local contractors.
“I am confident that our aggressive and re-energised revenue drive will maintain debt-revenue ratio at acceptable and manageable levels. We will also continue to be innovative in our borrowings by using instruments such as Sukuk, Green Bonds and Diaspora Bonds,” he added.
In terms of payroll and pension costs, the president proposed N3.6 trillion, making the recurring bill an increase of N620.28 billion compared to the 2019 budget.
Mr Buhari said that this addition would satisfy the “new minimum wage as well as our proposals to improve remuneration and welfare of our Police and Armed Forces.”