The Minister of Finance and Coordinating Minister for the Economy, Mr. Wale Edun has asserted that the country cannot rely on borrowing to fund the 2024 national budget.
He said Nigeria must make necessary sacrifices to generate adequate revenues to reduce the current high deficit budget financing, stressing that efforts must be made to generate adequate revenue so that the current high deficit financing can be reduced.
The Finance Minister made the submission on Thursday when he appeared before the joint Senate Committee on Finance, Appropriations, National Planning, Local and Foreign Debt, examining the 2024-2026 Medium Term Expenditure Framework and Fiscal Strategy Paper.
He briefed the joint panel in the 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, before the lawmakers called for a closed session.
Edun maintained that the best way Nigeria could fund its annual budgets was to spend more money on infrastructure that could generate revenues, pointing out that the advanced countries had increased interest rates because they wanted to bring down inflation rate to stabilize their economies.
He told the Senate Committee that with the prevailing interest rates, accessing foreign loans was becoming increasingly discouraging. According to him, “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 a 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. What is left for us to access those funds are expensive so it is the last thing that we must rely on.
“The last thing you can think of is to pile up more debts. The 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 per cent, even Ghana is at 25 per cent, and rich ones they are 50 per cent.
“The very rich countries have to be most advanced in terms of social safety nets and their social security system at 70 per cent of GDP. Government spending definitely will lead to an increase in revenues. The number one source of revenue, especially in the short term, even in the medium term is all revenue.”
Earlier in his remarks, the Senator representing Niger East and Chairman of the joint panel, Sani Musa expressed strong reservations about the 2024 revenue projections of some of the revenue-earning agencies.
He noted that going for external interventions would definitely not be an option because it would further push the country to further deficit financing.
Musa said: “Currently 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 had created room for the misappropriation of those funds.
“After meeting with the Nigerian Customs Service officials yesterday, we realized 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, known as 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?
“We are tired of judgement debts all over the place. We need to know the plans on the ground to collect excise duties and other tariffs so that we won’t run a deficit budget again next year.”