Nigeria’s Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, says Nigeria cannot rely on borrowing to fund the 2024 budget, noting that the best strategy is to invest in infrastructure development to generate more revenue.
Mr. Edun said this on Thursday when he appeared before the joint Senate Committee on the 2024-2026 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) in Abuja.
“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, 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,” he said.
Mr. Edun added: “What is left for us to access those funds are expensive so it is the last thing that we must rely on. As we know we have all the figures and debt servicing and cushioning 98 percent of government revenue.
“The last thing you can think of is to pile up 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 percent, even Ghana is at 25 percent, rich ones they are 50 percent.
“The very rich countries have to be most advanced in terms of social safety nets and its social security system at 70 percent of GDP. Government spending definitely will lead to increase in revenues. The number one source of revenue especially in short term, even in the medium term is all revenue.”
In his remarks, Senator Sani Musa, the Chairman of the committee expressed the fear that the revenue projections of government Ministries, Departments and Agencies that had so far appeared before the MTEF-FSP panel, were lower than the Federal Government projections.
The public hearing, which was organised by the Senate Joint Committees on Finance; is to dissect the fiscal document with the Ministries as well as the chief executives of government-owned agencies with a view to increase the national revenue base.
The outcome will set out the parameters upon which the next year’s budget will be prepared.
President Bola Ahmed Tinubu recently transmitted the 2024-2026 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) to the Senate for approval.
In the MTEF/FSP, the federal government pegged the price of crude oil at $73.96; exchange rate at N700/$; oil production at 1.78 million barrels per day; debt service of N8.25 trillion; inflation at 21 percent and GDP growth at 3.76 per cent.
The aggregate expenditure is estimated at N26.01 trillion for the 2024 budget, which includes statutory transfers of N1.3 trillion, non debt recurrent expenditure of N10.26 trillion, debt service estimated at N8.25 trillion, as well as N7.78 trillion being provided for personnel and pension cost.
