Wale Edun, Minister of Finance and Coordinating Minister for the Economy, yesterday, at the Senate said Nigeria cannot rely on borrowing to fund the 2024 budget, adding that Nigeria must make the necessary sacrifices to generate adequate revenues to reduce its current high deficit financing.
The minister had an interface with the joint Senate Committee scrutinising the 2024-2026 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP), chaired by Senator Sani Musa (APC, Niger), in Abuja.
He briefed the joint panel alongside the Executive Chairman of the Federal Inland Revenue Service (FIRS), Zacch Adedeji, and the Director General of the Debt Management Office (DMO), Patience Oniha, before the lawmakers called for a closed session.
He maintained that the best way Nigeria could fund its annual budgets was to spend more money on infrastructure that could generate revenues.
On why borrowing may be a bitter route to take, he told the legislators that advanced countries have increased their interest rates because they want to bring down inflation rates to stabilise their economies. According to him, accessing foreign loans would therefore be very expensive for a developing country to cope with.
“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 is to reduce the quantum of borrowing or intercept deficit financing in the 2024 budget.
“As we know, debt servicing and cushioning is taking 98 per cent of government revenue. The last thing you can think of is to pile on more debts. The government needs not just to maintain its activity, it needs to spend more. If you look at government spending and the budget as a percentage of GDP, ours is one of the lowest being 10 percent,” he said.
Even Ghana, he said, is at 25 percent, and rich nations get to a region of 50 percent.
Earlier, Musa, Chairman of the joint panel scrutinising the MTEF-FSP document, expressed fears that the revenue projections of the ministries, departments and agencies (MDAs) of the Federal Government that had so far appeared before the panel were a far cry from what government was proposing as income for the 2024 fiscal year.
Also, Musa noted that there are lots of leakages in the use of government resources. “A lot of funds being generated as revenues by most MDAs are not being remitted as at when due. Some even remit funds a year after they collected the money. The office of the Accountant General of the Federation should look properly in that direction.
“The current practice of delaying the remittances of revenues by the MDAs has created room for the misappropriation of those funds. After meeting with the Nigerian Customs Service officials on Wednesday, we realised that there were lots of shortfalls they are experiencing as a result of incidences of waivers. We want to know who is issuing those waivers. Is it the FIRS or the Ministry of Finance?
“We are also interested in knowing details of the Customs modernization project, e-Customs. The Senate Committee on Finance is interested in knowing the type of agreement that was signed on behalf of the Federal Government of Nigeria. What is the value of the e-Customs agreement; how much is Nigeria expecting?”
At another forum yesterday, Edun said foreign investors are not interested in improving the nation’s foreign direct investment due to rising inflation in Western countries and the need to keep interest rates high by tightening the money supply.
He said the lack of investor appetite to invest in Nigeria means the government may turn to the corporate world for solutions and investments.
Speaking at the 40th annual Conference of the Chartered Institute of Directors on Thursday in Abuja, the Minister said the development is forcing the government to depend on “our domestic resource mobilisation.”
