Finance Minister, Kemi Adeosun says Nigeria will not borrow to finance its budget but must find alternative fundraising mechanism.
Mrs. Adeosun disclosed this in Abuja at the quarterly presidential businesss forum, saying that Nigeria must continue to diversify its economy in order to generate additional revenue necessary to shoulder its budget.
“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.”
Speaking further on diversification, the minister said, “The problem is that we have been relying on oil and oil gave us a big budget size,” she said.
“It’s just one of our resources and as you know it’s only 10 per cent of our GDP. So, the rest of our economy – 90 per cent – really has to contribute to our revenue.
For two years running, Nigeria has pursued foreign loans in order to meet her record-high annual appropriation.
Nigeria has been in talks with the World Bank and the African Development Bank to take at least $2 billion in loans; with another $1.5 billion slated to be sourced from international borrowers, Reuters reports
In a separate effort that now appeared to have stalled, President Muhammadu Buhari also proposed a massive borrowing of up to $30 billion to finance major infrastructure projects across the country.
Lawmakers sceptical about the proposal expressed fears that it might not be favourable to the country in the long run, especially as the administration presented no clear plans of how it will utilise the loan.
Within this period, Mrs. Adeosun remained one of the most vocal proponents of external borrowing, using the lingering economic recession as a justification.
In May, the Finance Minister said Nigeria cannot afford to wait for recovered loot, thus justifying the borrowings.
“We cannot afford to rely on recovered loots to fund our budget, we have to go on short term borrowing,” she said. “What borrowing does for us is that it gives us flexibility because if we recover a lot from looted funds, we can always pay back.”
The N7.44 trillion 2017 budget has a deficit of N2.21 trillion indicating about 29 per cent of the budget is to be funded through loans, foreign and domestic.
On Tuesday, the minister also spoke on the benefits of the recently introduced Voluntary Assets and Income Declaration Scheme, VAIDS.
She said it “is aimed at improving revenue collection rate and generally improving domestic revenue mobilisation so that we can fund our budget sustainably.’’
The minister described as encouraging the response of Nigerians to the inauguration of VAIDS.
She expressed the hope that the Buhari administration would reposition Nigeria to the level that “we will not be so vulnerable as we have been in the past to oil price movements’’.
In his speech at the event, Acting President Yemi Osinbajo said the Muhammadu Buhari administration is committed to reviving the Nigerian economy within the next 18 months.