FG indicates plans to slow down borrowing as debt profile balloons

Nigeria’s Minister of Finance, Kemi Adeosun on Tuesday hinted of plans to slow down borrowing as the country’s debt profile balloons.

Nigeria’s total debt profile stands at N5.4 trillion and the country plans to borrow even more to fund the N2.36 trillion in the 2017 budget.

This is even as Acting President Yemi Osinbajo assured that despite the many problems experienced in the power sector and other sectors it is still possible to make progress. The country must keep on moving while the problems are being solved.

Adeosun who was speaking at the Quarterly Presidential Business Forum held at the State House, Abuja gave the hint while giving a presentation on the need to generate more revenue in the country. She said the government needs to improve on its revenue generation as it can no longer depend on borrowing to fund its annual spending plan which is not even big enough.

“We cannot borrow anymore we just have to generate enough to fund our budget” she said adding that the government needs to “mobilize revenue to fund the necessary budget increase” and this would be mostly drawn from tax.

According to her the problem has been Nigeria’s dependency on oil forgetting other sources of revenue including tax accounting for an abysmal 6percent tax ratio to the Gross Domestic Product (GDP).

“ We need to mobilize 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” she said .

Also, Nigeria’s budget is one of the lowest amongst her peers in the world and to join the league of global big players, Nigeria has to do what they do. She said this necessitated the Voluntary Assets and Income Declaration Scheme which is aimed at improving revenue collection rate and generally improving domestic revenue mobilization so that we can fund our budget sustainably.

“Our budget is significantly lower when attached to GDP, we are currently at 6percent. It is lower than all our peers we are currently at six percent 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 want’s to do. Am sure you will say that is because people are stealing or because you are wasting money but am saying even if you plug all the stealing and all the waste, the budget size is not big enough and that because we are not paying enough interms of tax or we are not
collecting enough in terms of tax. Statistics show our tax to GDP at 6%, Sub Saharan Africa average 17%, Asia 26%, most of the emerging market and the advanced countries are at 30-35 percent” she said .

Adeosun added that 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 for Nigeria if we continue on the tax to GDP ratio that is in the peer group of Afghanistan. I’m sure none of us aspire for Nigeria to become like Afghanistan, we are trying to benchmark ourselves against more develop countries and we must have to address these problems in a more fundamental sense.

In his remarks the Acting President told members of the private sector which mostly came from the power sector that though the government is not perfect it will deal with the problems they currently face.

“And all I will just want to say to the private sector is be sure that we have enough willing and able partners. There is no way we can ever be perfect. I mean government is a behemoth, where there are so many problems and issues.

“But, do not doubt for one moment at all, our commitment to ensuring that we are able to deliver on the promises that we have made.

“I believe very strongly that Nigeria will turn around. I have no doubt in my mind that if we are focussed even in the next 12 to 18 months, if we are focussed we will certainly see a turn around. And I really would want you to join us in being able to ensure that this happens to the Nigerian economy” he said.

The Minister of Power, Works and Housing who also spoke at the forum said though complex at the moment, the government is trying to re-evaluate the tariff regime. “This is one of the issues that the power sector reform programme seeks to address.

“There are issues about whether they are cost reflective. Tariff increases have also been subject to the vicissitudes of the larger economy. What should have been the tariff gains has been wiped out by the exchange rate depreciations” he said

The minister of state for petroleum, Ibe Kachikwu spoke on the challenges of and opportunities of Gas-To-Power in Nigeria. According to him power is the main demand sector for natural gas in Nigeria and a stronger interface and coordination is required between gas and power sectors.