The Minister of Finance and Coordinating Minister of the Economy, Wale Edun has disclosed that the federal government is not considering borrowing funds to finance the budget.
According to the Nigeria Bureau of Statistics, NBS, the nation’s public debt stock which includes external and domestic debt currently stands
at over N87 trillion or $108 billion.
Not a few Nigerians have warned the government to shun borrowing for now in order not to mortgage the country’s future.
The minister made this known when he appeared before the joint Senator Committee scrutinizing the 2024-2026 Medium Term Expenditure Framework, MTEF, and Fiscal Strategy Paper, FSP, led by Senator Sani Musa.
Edun stated that it had even bec ok me too expensive to borrow at this time, stressing that the government is focusing on other alternative source of income to support the Budget.
According to him, rich countries are tightening their economies, and one of the ways they are doing so, is by raising interest rates.
Edun said Nigeria’s GDP to debt to ratio is still very low compared to other African countries and some rich countries, whose ratio is between 25 and 50 percent, in spite of this, he said borrowing would be the last resort for the government.
“Clearly the environment that we have now, internationally as well as nationally, we are in no position to rely on borrowing,” he said.
“We have an existing borrowing profile. Our direction of tariff is to reduce the quantum of borrowing or intercepting deficit financing in the 2024 budget.
“Simply put internationally there is focus among rich countries on bringing down the inflation rate to stabilize the economies and give them opportunity for investment growth.
“We are in the process, of sacrificing that immediate goal for compacting their economies, or at least contracting the money supplies and pushing up the interest rates and of course, high-interest rates and investments don’t go together.”
The minister stated further: “What is left for us to access those funds are expensive so it is the last thing that we must rely on.
“As we know we have all the figures and debt servicing and cushioning 98 per cent of government revenue.
“The last thing you can think of is to pick on more debts. Government needs to not just maintain its activity, it needs to spend more. If you look at government spending, if you look at the budget as a percentage of GDP, ours is one of the lowest being 10%, even Ghana is at 25%, and rich ones they are 50 percent.”
Recall that the National Security Adviser, Nuhu Ribadu said during the week that the immediate past administration of President Muhammadu Buhari left a ‘bankrupt’ economy behind.
Meanwhile, many Nigerians are watching whether the government would fulfill its promise to focus on generating revenue rather than resorting to borrowing.
