FG To Borrow N2.343trn In Q1 To Fund 2021 Budget
The federal government has disclosed that beginning from this January, and till the end of the first quarter of 2021, it would raise a total of N2.343 billion locally to finance the 2021 budget.
President Muhammadu Buhari had on 31st December 2020 signed the 2021 Appropriation Bill of N13.588 trillion into law, and which the government had planned to partly finance with a new borrowings of N4,686,775,885,696 that is made of both domestic and foreign borrowings
Many have raised concerns on the finances of the fiscal policy especially at a time of declining earnings and the second recession in five years.
Speaking in Abuja, during the breakdown of the budget Tuesday in Abuja, the Director-General of the Debt Management Office (DMO) Patience Oniha stated that a very large amount of borrowing is needed to fund the 2021 budget and the government would adopt measures to raise funds in the first quarter of 2021.
“So if we look at the budget very clearly if not for the constraints we should have a bigger budget but even with the size of the budget a very large amount of borrowing of N4.686 trillion is needed to fund the budget and it is split equally between domestic and external.
“So for domestic as it is practised, we will start raising about N2.343 trillion from this January and you will soon start to see the debt issued calendar for the first quarter and we will continue with that practice of raising fund in the domestic market while we keep tracking the development in the international capital market”.
The finance minister, Zainab Ahmed stated the ministry will work with the apex bank to regularise the previous borrowings and agree on tenor and rates.
“We are working with the CBN to regularize the previous borrowing that has been made to turn them into formal borrowing by the Nigerian economy and to this extent, the CBN and I need to agree on the rates and the tenors and the cost of the borrowing, so we would be formally doing that in early 2021 on the previous borrowing that has been made, and also projected borrowings in 2021. So we will design a special instrument that limits what is done in terms of domestic borrowing from the CBN.”
Aside from the local and foreign borrowings, the Federal Government also intends to draw from the N850 billion unclaimed dividends and funds in dormant accounts in Deposit Money Banks using Part XII of the Companies and Allied Matters Act in the signed Finance Act 2020 which allowed the government to borrow unclaimed dividends and dormant account balances owned by Nigerians in any bank in the country.
The Social, Economic and Accountability Project, SERAP opposing this in a statement by its deputy director, Kolawole Oluwadare, described the Act as illegal as he argued that, “The right to property is a sacred and fundamental right. Borrowing unclaimed dividends and funds in dormant accounts amount to an illegal expropriation and would hurt poor and vulnerable Nigerians who continue to suffer under reduced public services and ultimately lead to unsustainable levels of public debt.
On the issue of unclaimed dividends and dormant accounts, the finance minister said the ministry will meet with the CBN and the registrars of companies to ascertain the fund which is as much as N850 billion.
“We have to get the exact report from CBN and then registrars to ascertain that so it could be realised into this special trust fund for unclaimed dividends and dormant account. Again this is a special trust fund, which means the government is keeping the money in trust for the beneficiaries and, any time that a registrar or a bank confirms the true and bonafide owner, the government will release from that trust fund to the investor’s bankers”.
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