BEVERLY HILLS, July 11, (THEWILL) – The Minister of Finance, Mrs. Kemi Adeosun, on Tuesday stated that Nigeria must no longer borrow to fund its budget and should rather raise money internally to fund spendings for the year.
Adeosun, who stated this during the quarterly business forum held at the Banquet Hall of the Presidential Villa in Abuja, suggested that Nigeria will no longer seek such loans, or an additional $1.5 billion it had planned to raise from international debt markets.
Disclosing that the federal government’s medium-term plan was based strongly on increasing revenue mobilisation, she explained that increasing the country’s revenue was not something that could be attained instantly.
The minister said, “We cannot borrow anymore, we just have to generate funds domestically to fund our budget. Mobilise revenue to fund the necessary budget increase.
“For example, in some cases like tax collection we needed data, we needed to sign some treaties and we needed tax policy reforms. We have been working hard on these measures.
“Our focus on revenue is total. Revenue generation is not as rapid as raising debt but it is permanent. Increased revenue will ensure sustainability, will prevent us from falling into a debt trap and will reduce our debt service to revenue ratio.”
THEWILL recalls that the Director General of the Budget Office of the Federation, Mr. Ben Akabueze, had in May said the country has a shortfall of $7.5 billion for its 2017 budget expenditure, adding that this would be addressed with $3.5 billion from the aforementioned loans and debt.
Adeosun went on to express concern over the inability of government to deliver essential services due to financial constraints, which she blamed on the nation’s small annual budget.
Putting the nation’s annual budget as a percentage of gross domestic product, GDP, at six per cent, she said this was significantly low, adding that it was the lowest in sub-Saharan Africa.
The minister stated that the situation was so precarious that salary payments take the largest chunk of the annual budget, explaining that the development was largely caused by non-payment of taxes by the Nigerian public.
She disclosed that the by-product of tax evasion was the incapacity of the federal government to deliver basic projects aimed at improving the living standards of the people, even as she emphasised the drive of the government to generate more revenue to alter the status quo.
“Our budget is significantly lower relative to GDP. We are currently at six per cent. It is lower than all our peers. We are currently at six per cent and that is the lowest in sub-Saharan Africa and one of the lowest in the world.
“Our budget size is too small and that means we can only pay salaries in some cases and we don’t have money to deliver essential services.
“There simply isn’t enough money in government to do what government wants to do. I am sure you will say that is because people are stealing or because you are wasting money, but I am saying even if you plug all the stealing and all the waste, the budget size is not big enough and that is because we are not paying enough in terms of taxes, or we are not collecting enough in terms of taxes.
“Statistics show our tax to GDP at 6 per cent, while the sub-Saharan Africa average is 17 per cent; Asia’s is 26 per cent. Most of the emerging markets and advanced countries are at 30-35 per cent.
“It is interesting, if you look at the statistics, there is no poor country that has a high tax to GDP ratio and there is no rich country with a lower one. And so, if we want to move with the prosperous countries, we have to do what they do.
“We will not achieve prosperity in Nigeria if we continue on the tax to GDP ratio that is in the peer group of Afghanistan. I’m sure none of us aspires for Nigeria to become like Afghanistan.
“We are trying to benchmark ourselves against more developed countries and we must address these problems in a more fundamental sense,” she said.
