The Federal Government has blamed its violation of the fiscal responsibility law and exceeding of the three percent borrowing threshold in 2020 on heightened inflation, an insufficient supply of foreign exchange, and the overall slow growth of the economy.
The fiscal responsibility law provides a limit of 3 percent debt threshold for sustainability but the president can “exceed the ceiling if there is a clear and present threat to national security or sovereignty of Nigeria”.
In an interview with France 24 on Thursday, minister of finance, budget and national planning, Zainab Ahmed, said the government has set a 3 percent borrowing limit for 2021 after exceeding its borrowing threshold last year.
“Unfortunately, the COVID-19 has set us back in terms of reducing borrowing. Our target was that from 2021, our borrowing from local and international sources would reduce,” she said.
She said in 2020, the government had to borrow much more than what was planned, which means exceeding its fiscal threshold of not borrowing more than three percent of GDP.
“We are now at about four percent of GDP. That is a target we are trying to work on and bring down.”
According to the Debt Management Office (DMO), Nigeria’s total public debt stock stood at N33.10 trillion in Q1 2021, representing an increase of N191 billion compared to the N32.91 trillion recorded in December 2020.
In the first quarter of 2021, the nation’s gross domestic product (GDP) grew 0.51 percent after emerging from COVID-19 induced recession in the fourth of 2020 with 0.11 percent growth.
The minister said the federal government is exploring various sources to enhance the revenue basket of the nation by introducing an efficient collection system.
