Necessary sacrifices must be made to generate enough revenue and reduce Nigeria’s high deficit financing, the Minister of Finance/Coordinating Minister for the Economy, Mr. Wale Edun, submitted yesterday.
He foreclosed government’s reliance on borrowing to fund the next year’s 2024 Budget, saying the cost of taking foreign loans would be too heavy for developing nations to shoulder.
Edun spoke when he appeared before the Senator Sani Musa-led joint Senate Committee scrutinising the 2024-2026 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP) in Abuja.
The minister made the assertions before the panel in the company of the Executive Chairman, Federal Inland Revenue Service (FIRS), Zacch Adedeji and the Director-General of the Debt Management Office (DMO), Ms. Patience Oniha before lawmakers called for a closed session.
Edun insisted that the best was for Nigeria to fund its annual budgets was to invest more money on revenue-generating infrastructure.
According to him, advanced countries have raised their interest rates to bring down inflation rate and to stabilise their economies, adding that accessing foreign loans will be very expensive for a developing countries to cope with.
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 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 stabilize 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. “As we know we have all the figures on debt servicing and cushioning 98 per cent of government revenue.
“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 while rich countries are at 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 GDP. Government spending definitely will lead to increase.
“The number one source of revenue especially in short term, even in the medium term is all revenue.”
Musa earlier fears that the revenue projections of the ministries, departments and agencies of the Federal Government that have so far appeared before his panel were far less than what the Federal Government has proposed as income in the 2024 fiscal year.
He noted that going for external interventions would definitely not be an option because it would further push the country into 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 a room for the misappropriation of those funds.
“After meeting with the Nigerian Customs Service officials yesterday, we realise 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 ground to collect excise duties and other tariffs so that we won’t run a deficit budget again next year.”
