Nigeria will continue to borrow. Nothing has changed. The Economic Recovery and Growth Plan provides for an increase in spending over a three-year period, which is reflected in the 2017 budget. In 2017, the government is committed to spending N7.44 trillion, with a projected fiscal deficit of N2.356 trillion, which will be funded by a combination of domestic and international borrowing.
Nigeria’s debt to GDP ratio is low when compared to our contemporaries in Africa, and across most of the developed world. We have headroom to borrow and are doing so aggressively in the short to medium term in order to address our infrastructure deficit and to stimulate growth.
At the same time, it is vital that Nigeria diversifies its revenue base and builds its revenue profile, as is projected in the ERGP, to ensure that we do not continue to overly rely on debt to fund our budget spending over the long term. To build a sustainable economy we must replace the debt that we are incurring in the short to medium term, with strong revenue sources. That is why the Ministry of Finance is focused on expanding our tax base, which we are doing with a range of initiatives which include the Voluntary Asset and Income Declaration Scheme (VAIDS) and recruitment of Community Tax Liaison Officers (CTLOS) to improve tax compliance in the long-term, and we are heavily focused on making government spending more productive and efficient.
Nigeria cannot rely on debt indefinitely. We must be focused on a future where we can earn enough internal revenue to spend on the projects that will grow our economy. In the short term, though, increased spending, funded by debt, will act as the stimulus we need to grow.