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No plans to borrow N2trillion from pension funds– minister

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Zainab Ahmed, Minister of Finance, Budget and National Planning, on Friday stated that the Federal Government was not planning to borrow N2trillion pension funds for infrastructure development.

Ahmed, at the Udo Udoma & Belo-Osagie (UUBO) second private equity summit in Lagos, explained that the National Economic Council (NEC) only set up a committee to encourage pension fund managers to invest in infrastructure development.

“Its not true that government is borrowing the pension fund”, NAN quoted her as saying.

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“What we agreed is to design a product that pension fund managers will fund attractive enough to invest in, that will give them free safe returns.

“Right now, the regulator, PENCOM, actually allows pension funds managers to invest up to 20 per cent of their money in infrastructure”.

Ahmed said that now, pension funds managers don’t have an opportunity to invest in Open Market Operation (OMO) anymore.

”We are actually working to design products which they can uptake and we are also considering, in addition to regulation, whether we should amend the Act to allow them do other things,” she stated.

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On borrowings, Ahmed explained that government was working very hard to reduce domestic borrowing.

“In 2015, the total government stock that we had was 80 per cent domestic and 20 per cent foreign.

“But we are gradually changing that; the debt management strategy is to move the ratio to 60 per cent domestic and 40 per cent external and now it’s 35 per cent external borrowing.

“This is to give room for private sector to borrow and to reduce cost of debt servicing,” Ahmed said.

Speaking on Value Added Tax (VAT) increment, Ahmed, who admitted that it would contribute to inflation rise, said that it would moderate over time.

“When you increase any form of tax, it leads to inflation, but its a temporary thing; after some months it will moderate,” the minister said.

In January, President Muhammadu Buhari signed the Finance Bill – which enforced the new tax regime – into law.

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