‘FG will continue to borrow,’ Finance Ministry counters Minister
The Ministry's statement asserted that FG will borrow from foreign and domestic financial institutions to fund its programmes.
The Ministry of Finance headed by Mrs. Kemi Adeosun has contradicted the Minister’s comment that Nigeria cannot borrow anymore due to its rising debt profile.
Adeosun had on Monday, July 10, said that the Federal Government cannot afford to any longer to fund its budget, adding that it should instead raise money internally.
“We cannot borrow anymore, we just have to generate funds domestically to fund our budget, and mobilise revenue to fund the necessary budget increase,” Adeosun had said.
But in a statement issued on Thursday, July 13, by the ministry’s Director of Information, Mr. Salisu Dambatta, the Minister’s comment was contradicted.
The statement asserted that the Federal Government will continue to borrow from foreign and domestic financial institutions to fund its programmes.
“Following recent reports on comments by the Minister of Finance about Nigeria’s debt strategy and ability to borrow, it is important to clarify the position of the minister and the Federal Government,” the statement said.
“Nigeria will continue to borrow. Nothing has changed. The Economic Recovery and Growth Plan provides for an increase in spending over a three-year period, which is reflected in the 2017 budget.
“In 2017, the government is committed to spending N7.44tn, with a projected fiscal deficit of N2.356tn, which will be funded by a combination of domestic and international borrowing.”
It added that, “Nigeria’s debt to GDP ratio is low when compared to our contemporaries in Africa and across most of the developed world.
“We have a headroom to borrow and are doing so aggressively in the short to medium term in order to address our infrastructure deficit and to stimulate growth.”
The statement stressed that the government is working towards diversifying the country’s revenue base, adding that this would, in the long run, save the Nigeria from relying on debt to fund its budget.
It, however, said the government will borrow at a reduced proportion.
It added, “It is vital that Nigeria diversifies its revenue base and builds its revenue profile as is projected in the ERGP to ensure that we do not continue to overly rely on debt to fund our budget spending over the long term.
“To build a sustainable economy, we must replace the debt that we are incurring in the short to medium term with strong revenue sources.
“That is why the Ministry of Finance is focused on expanding our tax base, which we are doing with a range of initiatives, which include the Voluntary Asset and Income Declaration Scheme and recruitment of community tax liaison officers to improve tax compliance in the long-term, and we are heavily focused on making government spending more productive and efficient.
“Nigeria cannot rely on debt indefinitely. We must be focused on a future where we can earn enough internal revenue to spend on the projects that will grow our economy. In the short term, though, increased spending, funded by debt, will act as the stimulus we need to grow.”