SAN FRANCISCO, January 20, (THEWILL) – The Minister of Finance, Mrs. Kemi Adeosun, says the inability of the Federal Government to generate adequate revenue to meet its obligations has left it with no option order than resorting to international financial institutions for loans to fund critical infrastructure projects.
She explained that the huge monthly personnel cost of about N210bn, coupled with an additional N120bn as debt service burden, totalling N330bn expenditure every month, have made it difficult for the federal government to use the low oil earnings to generate enough revenue to meet obligations as well as finance capital projects.
The Finance minister spoke in Abuja on Thursday at the 14th Daily Trust Dialogue, which had: ‘Beyond recession: Towards a resilient economy’ as its theme.
A lot of Nigerians have faulted the federal government’s intention to borrow $29.9bn from foreign sources, but Adeosun sttessed that the realities on ground had made it imperative for Nigeria to get the loan if it must survive the economic crisis.
According to her, “Where are we today and what’s the problem? This is my requirement every month: salaries, statutory transfers every month, I need N210bn every month. Debt, not the debt that we are planning to take, but the inherited debt; I need N120bn just to service it. So, every month, I need N330bn
“Just to give you an idea of where we are today, last month’s FAAC allocation was N310bn. So, the Federal Government got about N140bn; but I must cover N330bn a month before we can do a single capital project.
“So, when we start the argument, should we borrow, should we not? The truth is that we have no choice. If you are waiting for the oil price to recover, the prognosis is that it’s not going to go back to $110 per barrel any time soon.”
The minister continued, “So, to get the economy growing, we have no choice but to look for low-cost funds and put that infrastructure in place, because it is the infrastructure that will unlock the economy.
“It is the infrastructure that will allow us to, rather than importing powdered milk, have the cows in Taraba State with huge potential.”
She asserted that Nigeria would not have slipped into recession if past government had adopted the steps being taken now to reduce expenditure through efficiency in spending when oil price was $110 per barrel
Aside borrowing, Adeosun disclosed that part of the survival strategies of the present government was to ensure that revenue generating agencies remitted their operating surpluses to the public treasury.
