The Minister of Finance and Coordinating Minister for the Economy, Mr. Wale Edun, has said Nigeria was not in a good position to continue its reliance on borrowings to fund the 2024 budget.
He pointed out that what was required at this time was for the nation to make necessary sacrifices, improve on its revenue generation and drastically reduce its current unsustainable deficit financing.
Edun said this in his opening remarks when he appeared before the Senator Sani Musa-led Joint Senate Committee considering projections contained in the 2024-2026 Medium Term Expenditure Framework and Fiscal Strategy Paper, in Abuja yesterday.
The miniater appeared before the Senate panel in company of the Executive Chairman, Federal Inland Revenue Service, FIRS, Mr. Zacch Adedeji and the Director General of the Debt Management Office, Ms. Patience Oniha.
He spoke before the lawmakers asked journalists out of the meeting room to allow for a closed session.
During his remarks, the minister explained that the best way for the nation to fund its annual budget was to invest more on infrastructure, which could in turn generate the much-needed revenue.
He stressed that in advanced nations of the world, governments had increased interest rates because of the desire to bring down inflation and stabilise their economy.
According to him, accessing foreign loans at this time will be a very expensive venture for a developing nation like Nigeria.
Edun said: “Clearly, the environment that we have now, internationally, as well as nationally, we are in no position to rely on borrowing.
“We have an existing borrowing profile. Our direction of tariff is to reduce the quantum of borrowing or intercepting deficit financing in the 2024 budget.
“Simply put, internationally, there is focus among rich countries on bringing down the inflation rate to stabilise the economies and give them opportunity for investment growth.
“They are in the process of sacrificing that immediate goal for compacting their economies, or at least contracting the money supplies and pushing up the interest rates and of course high interest rates and investments don’t go together.
“What is left for us to access those funds are expensive, so it is the last thing we must rely upon. As we know, we have all the figures and debt servicing and cushioning 98 per cent of government revenue.
“The last thing you can think of is to accumulate more debts. Government needs to, not just maintain its activity, it needs to spend more. If you look at government spending, if you look at the budget as a percentage of GDP, ours is one of the lowest, being 10%. Even Ghana is at 25%, rich ones are 50 per cent.
“The very rich countries have to be most advanced in terms of social safety nets and its social security system at 70 per cent of the GDP. Government spending definitely will lead to increase. The number one source of revenue, especially in (the) short term, even in the medium term, is oil revenue.”
How economy can attract investments
At another event: the 2023 annual directors conference of the Chartered Institute of Directors of Nigeria, CioD, in Abuja yesterday, Edun said: “The agenda of the Federal Government is to provide first and foremost a stable economy, growing more than population growth, with low inflation, stable foreign exchange to enable investments in productive activities.
“This is what the President is working on and we are a work in progress and we look forward to the task at hand.
“The big price is to make ourselves a formidable economy, our institutions a corporate governance place so that those interested in investing can have trust in their investment.
According to him, the Nigerian economy is already diversified, but its source of foreign revenue is not fully diversified.
Earlier, the committee chairman, Senator Sani Musa, expressed fears that the revenue projections of the ministries, departments and agencies, MDAs, of the Federal Government that had so far appeared before the committee represented a far cry from what the Federal Government was proposing as income in the 2024 fiscal year.
