The Minister of Finance and Coordinating Minister for the Economy, Mr. Wale Edun, emphasized Nigeria’s unsuitability for continued reliance on borrowing to finance the 2024 budget.
He advocated for essential sacrifices, enhanced revenue generation, and a significant reduction in the current unsustainable deficit financing. Edun conveyed these sentiments during his appearance before the Senator Sani Musa-led Joint Senate Committee reviewing the 2024-2026 Medium Term Expenditure Framework and Fiscal Strategy Paper in Abuja.
He, accompanied by the Executive Chairman of the Federal Inland Revenue Service, Mr. Zacch Adedeji, and the Director-General of the Debt Management Office, Ms. Patience Oniha, made these points prior to a closed session requested by lawmakers.
Additionally, the minister highlighted the importance of prioritizing infrastructure investment as a means to generate crucial revenue, citing the approach taken by advanced economies in managing interest rates to combat inflation and stabilize their economies. He cautioned against seeking foreign loans, deeming them a costly endeavor for a developing nation like Nigeria at this juncture.
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.”
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