The Debt Management Office (DMO) says the federal government used loans to bring the economy out of the 2017 and 2021 recessions.
Patience Oniha, director-general of the agency, said this on Thursday while delivering a keynote address at the fourth national budget roundtable and panel discussion at Covenant University, Ogun state.
Oniha said government borrowing could also bolster other sectors of the economy.
“The Nigerian government has successfully utilised borrowing as a tool for economic recovery, to bring the economy out of cycles of recessions, first in 2017 and second in 2021,” Oniha said.
“Government borrowing can also support other sectors of the economy that attract foreign investors and have multiplier effects on the country.”
Oniha also said most of the critical infrastructure built by the federal government were funded from internal and external borrowings.
She added that government borrowing was not necessarily bad if used to finance important developmental projects and programmes.
The director-general listed some of the infrastructure built by the federal government as the Lagos-Ibadan expressway, Second Niger Bridge, train station in Iddo and the Lagos and Enugu airports.
Speaking further, she said the nation’s current debt profile to gross domestic product (GDP) ratio was 22 percent, adding that the maximum debt ratio to GDP of any country should be 40 percent.
“The nation’s debt profile is fast growing as the country has a huge infrastructure deficit,” she said
“However, the government is working tirelessly to diversify revenue sources to reduce pressure on crude oil, which is prone to volatility.”
Oniha added that spending on infrastructure by the federal government was meant to create job opportunities for youths.
Nigeria’s total public debt stock had increased to N39.556 trillion in 2021, according to DMO.
Recently, the agency had also said borrowing to finance budget deficits and critical infrastructure was “not necessarily bad” for the country.