(5 minutes read)
· Nigerian President Muhammadu Buhari presented the 2021 budget to the National Assembly recently amidst the fear that the country is caught in a debt trap
· A major highlight of the Budget is the announcement that a fresh borrowing of US$33.2 billion will be resorted to
· The borrowal will constitute a third of the total of the total budget pegged at US$100 billion
Nigerian President Muhammadu Buhari presented the 2021 budget to the National Assembly recently amidst the fear that the country is caught in a debt trap.
A major highlight of the Budget is the announcement that a fresh borrowing of US$33.2 billion will be resorted to. The borrowal will constitute a third of the total of the total budget pegged at US$100 billion.
Close to 420 Billion Naira has been earmarked for the Social Investment Programs. The Debt Management Office in August said that total loans by the Chinese government and affiliate agencies to Nigeria were over US$3 billion. In total, Nigeria’s public debt was US$79.3 billion dollars at the end of March. Significantly, the West African country’s debt has risen by over 158% in the last five years.
The Budget addresses five strategic objectives viz. promoting fiscal equity by mitigating instances of regressive taxation; reforming domestic tax laws to align with global best practices; introducing tax incentives for investments in infrastructure and capital markets; supporting micro, small and medium-sized businesses in line with the Ease of Doing Business Reforms; and raising revenues for the Government. It proposes an increase in the Value Added Tax (VAT) rate from 5% to 7.5%. The additional revenue from increase in VAT rate would be used to fund healthcare, education and infrastructure.
