There are concerns over the whopping amount allocated to debt servicing in 2016. At N1.47 trillion as amount earmarked for debt servicing, analysts are afraid that, coupled with the N2.2 trillion fiscal deficit, the year 2016 present quite a challenge.
The amount represents 24.08 percent of total budget.
Wale Abe, Chief Executive Officer of the Financial Market Dealers Association (FMDA) said, “one thing remains constant, when you borrower you must service. Gradually it is mounting. But we can we do nothing. Unless crude oil prices rises”, he said.
The budget copy obtained from the website of the Budget Office of the Federation (BoF), the sum of N1.30 trillion was planned to be spent on servicing the domestic component of the nation’s debt, while the sum of N53.48 billion  was proposed for foreign debts.
In addition, N113.44 billion was proposed to be set aside for a sinking fund that would enable the government to retire maturing loan obligations.
The 2016 budget has a fiscal deficit of N2.22 trillion, representing 2.16 percent of Nigeria’s Gross Domestic Product.
The deficit, according to the President, will be financed from new borrowings of N1.84 trillion made up of domestic borrowing of N984 billion and foreign borrowing of N900 billion.
This, according to the budget document, is expected to increase Nigeria’s overall debt profile to 14 percent of the Gross Domestic Product (GDP).
President Muhammadu Buhari had said, “We have proposed a budget of N6.08 trillion, with a revenue projection of N3.86 trillion, resulting in a deficit of N2.22 trillion. The deficit, which is equivalent to 2.16 percent of Nigeria’s GDP, will take our overall debt profile to 14 percent of our GDP. This remains well within acceptable fiscal limits.
“Our deficit will be financed by a combination of domestic borrowing of N984 billion and foreign borrowing of N900 billion, totalling N1.84 trillion. Over the medium term, we expect to increase revenues and reduce overheads, and to bring the fiscal deficit down to 1.3 percent of the GDP by 2018.”
Finance analysts, who spoke to our correspondent, expressed concern about the huge fiscal deficit contained in the budget proposal, stating that it might affect the rate at which the debts would be repaid.
Statistics obtained from the website of the Debt Management Office put the country’s total debt profile at $63.8 billion.