Why FG Borrowed N473bn- Okonjo- Iweala

Nigeria is facing “a difficult cash crunch”, which
has forced a N473 borrowing to finance recurrent
expenditure with a N882 billon as an estimated
budget, for this year’s borrowing, Finance
Minister Ngozi Okonjo-Iweala told reporters
yesterday. The situation was dominantly caused
by the 50 per cent decline in oil revenues.
As a consequence of the revenue challenges, Mrs.
Okonjo-Iweala stated that “there has been no
capital budget release so far this year”.
Traditionally, the first part of the year witnesses
low revenue because tax receipts come in from
the middle of the year. This has compounded the
challenges caused by the steep drop in revenues
due to the oil price fall.”
She said : “Out of the 882 billon naira budgetary
provision for borrowing, the government has
borrowed 473 billion naira to meet up with
recurrent expenditure, including salaries and
overheads.”
As she tried to be upbeat in a speech on Tuesday
after lawmakers approved the 2015 budget –
revised three times because of slashed oil prices
that provide 80 percent of revenue for the
government of Africa’s biggest petroleum
producer. She stressed that the country has the
advantage of being an asset rich country and in
times of financial difficulties, the country could
leverage on its assets by either selling some off or
using them to borrow money to manage the
economy, which “is a definite strength”.
However that, she said, has been left for the
incoming government to decide. Adjustments will
probably have to be made to accommodate the
amount of subsidy that needs to be paid also, she
said. In spite of this challenge, the government,
Mrs. Okonjo-Iweala added, “has managed to keep
the economy stable to the point that the Nigerian
economy, which is projected to grow by 4.8 per
cent this year is, according to respected analysts,
doing much better than many other oil producing
countries.”
Speaking on the 2015 budget parametres, Mrs.
Okonjo-Iweala said the National Assembly passed
the budget with an expenditure outlay of N4.493
trillion (up from the N4.425 trillion proposed by
President Goodluck Jonathan) representing an
increase of N67.43 billion. The National Assembly
passed a benchmark oil price of US$53 per barrel
$1 higher than the budget proposal, generating
an extra revenue of N54.25 billion for the
Federal Government.
This budget has not been signed into law by
President Goodluck Jonathan – the finance
minister said this might be done in a couple of
days time.
Critics blame the financial crisis in part on the
exuberant spendin spree ever witnessed during
the country’s election. However, a more
concerned news, is the shape at which the
incoming government, takes over on May 29.