The Minister for Finance, Mrs. Kemi Adeosun, has warned that the country can not afford to borrow more to fund its budget but should instead raise money internally to fund the budget.
Kemi Adeosun who made the comments while speaking at the quarterly business forum held at the Banquet Hall of the Presidential Villa in Abuja suggested that Nigeria will no longer seek such loans or an additional $1.5 billion it had planned to raise from international debt markets.
“We cannot borrow any more, we just have to generate funds domestically to fund our budget. Mobilise revenue to fund the necessary budget increase,” she said.
The remark by the finance minister, Kemi Adeosun was a pointer that the country might shelve its planned $2 billion loans from the World Bank.
Plans for lenders like the World Bank and African Development Bank (AfDB) to loan at least $2 billion to Nigeria have been stalled for over a year as international organisations’ frustrations mounted at the country’s refusal to impose key fiscal reforms such as allowing its foreign exchange rate to float freely.
Africa’s largest economy is in its first recession in 25 years and had planned to borrow extensively from overseas to fund a record budget aimed at helping the country spend its way out of its economic doldrums.
In May, the Director-General of the Budget Office of the Federation, Mr. Ben Akabueze, had said the country has a shortfall of $7.5 billion for its 2017 budget expenditure, adding that this would be addressed with $3.5 billion from the aforementioned loans and debt.
The government also planned to raise $4 billion from the local debt market, he said at the time.
But Adeosun said the government’s medium-term plan was based strongly on increasing revenue mobilisation. She stressed that increasing the country’s revenue was not something that could be attained instantly.
“For example, in some cases like tax collection we needed data, we needed to sign some treaties and we needed tax policy reforms. We have been working hard on these measures.
“Our focus on revenue is total. Revenue generation is not as rapid as raising debt but it is permanent. Increased revenue will ensure sustainability, will prevent us from falling into a debt trap and will reduce our debt service to revenue ratio,” the minister added.
Acting President Yemi Osinbajo also at the forum solicited the co-operation of the private sector in the federal government’s quest for a better country, assuring it that the government has the will to turn the country around within 18 months.
The Acting President said the government is extremely mindful of the many sacrifices that Nigerians have had to make over the last few years, but expressed optimism that the government was on the right path to turn things around for the better.