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Recession

The minister of finance, Kemi Adeosun, has said that Nigeria would have faced longer recession period if the country had not borrowed.

Adeosun made the statement in an interview she granted Punch, in which she said she was not worried that the government was borrowing to run the economy.

The minister stated that borrowing for long-term infrastructure are the investments that allows business to thrive.

She said: “If you are borrowing to pay salaries, travels, do training or in a wasteful venture, then you have to be worried. But if you are borrowing for long-term infrastructure, those are the investments that allow business to thrive.

You cannot ask someone to come and fix a factory where you know he cannot move his goods from one place to another after producing them. Such investors won’t come.

“Infrastructure is a real asset. So, I am not worried about borrowing. Our debt to Gross Domestic Product ratio remains very low – one of the lowest in Africa. And we are working very hard to increase our revenue to make sure our debts are serviced adequately.

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“The alternative, when we were in recession, was to wait for oil price to recover. That alternative would have created a very long recession had we not taken action then to spend.

If we hadn’t done what we did, to borrow and invest in the economy and infrastructure, the recession would have lasted longer than what it eventually was. Besides, the projects we are hugely investing in are long-term projects that will provide growth.”

Reacting to the worries of Nigerians over the country’s rising debt profile which is in excess of N21 trillion, she said: “Like I earlier said, I am not worried at all. Our borrowing is sustainable and well-managed. First, we took a decision to reflate the economy.

Our borrowing is a true reflection of our economy. When your income has gone down, the only place you can go is to borrow. It was a strategic decision. We borrowed and invested heavily in infrastructure and then increased our revenue so that we can pay back the debt.

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“It was a deliberate decision. We looked at our budget in terms of size and increased it from N4trn to N7trn so that we could focus on developing our infrastructure. It was a very deliberate policy.

It was deliberate because if we do not invest in our capital projects, we cannot grow. If all that government does is to pay salaries, we will be running a loss every year. So, it was a strategic decision to tie that money on capital projects.

“There is no sense having no debt, no road, no power and no growth prospect. With the kind of young people that we have and the kind of jobs we want to create, we need to build infrastructure and we cannot use oil money alone to fund our debt. We have to be confident and say we are going to invest in our roads, power, transport because with those things, we can grow our economy.”

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Meanwhile, it was reported that an economist, Prof Sheriffdeen Tella, on Monday, March 19, described the nation’s debt stock of N21.73 trillion as worrisome and urged the federal government to stop external borrowings.

Tella, a professor of Economics at the Olabisi Onabanjo University, Ago-Iwoye, Ogun, stated that the current size of the country’s external debt was worrisome.

It was reported that the Debt Management Office (DMO), on March 14, said that Nigeria’s external debt had risen to 18.91 billion dollars (N5.79 trillion) as at December 31, 2017. The DMO said that domestic debt also rose to N15.94 trillion, bringing the total debt stock to N21.725 trillion (70.92 billion dollars).

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