DR Titus Okunronmu, a former Director, Budgetary Department, Central Bank of Nigeria (CBN) has advised the Federal Government to use borrowed funds strictly for building capital projects.
According to him, financing the nation’s budget through deficit is not a bad idea provided that the borrowed funds are not used for recurrent expenditure.
Okunronmu said this in an interview with the News Agency of Nigeria (NAN) in Ota on Tuesday.
NAN reports that the nation’s debt profile rose from 10.32 billion dollars on June 30, 2015, to 22.08 billion dollars as at June 30.
He said the Federal Government was inevitably financing the nation’s budget through a deficit in view of the crises in the economy, and that the nation should not have borrowed if it had a balanced budget.
He said the nation needed to borrow to finance the imbalance in the annual budget, thereby increasing the nation’s debt stock.
“If the nation has a budget deficit as has been the case for the past four years, it is inevitable for the government to borrow, and this made the nation’s debt profile to be on the rise.
“It is called conditional instruments because if the budget had been balanced, the country would not need to borrow.
“Borrowing is not a bad idea as it is an instrument of fiscal policy used to address crises when an economy is in problems,” Okunronmu said.
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