SAN FRANCISCO, July 13, (THEWILL) – The Minister of Finance, Mrs. Kemi Adeosun, has clarified an earlier statement that the federal government must move away from debt in funding future budgets, explaining that Nigeria has no other option but to continue borrowing in order to implement the Economic Recovery and Growth Plan, ERGP.
Adeosun, was earlier reported as stating at the quarterly presidential business forum in Abuja, that Nigeria needs to generate more money to fund its budget.
She was quoted thus: “We need to mobilise additional revenue to fund our budget.
“We have got to get our budget bigger and to do that we cannot borrow anymore. We simply have to generate more revenue, we have to plug the leakages, we have to improve tax collection so that we can manage our borrowing.”
But in a statement signed by the Director of Information in the Federal Ministry of Finance, Salisu Dambatta on Thursday, the minister stated that Nigeria will continue to borrow to fund its budget.
According to her, “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 N7.44 trillion, with a projected fiscal deficit of N2.356 trillion, which will be funded by a combination of domestic and international borrowing.
“Nigeria’s debt to GDP ratio is low when compared to our contemporaries in Africa, and across most of the developed world.
“We have 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,” she said.
The minister disclosed that in addition to borrowing, the government was working towards having a diversified revenue base to ensure that the country do not continue to overly rely on debt to fund the budget.
“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 (VAIDS).
“Also, the recruitment of Community Tax Liaison Officers (CTLOS) is 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,” she said.
Adeosun pointed out that increased spending, funded by debt, would for now act as a stimulus for growth.
