THE Minister of Finance and Coordinating Minister for the Economy, Wale Edun, said Nigeria is exploring options from a pool of funds from climate financing to support deficits in 2024 budget.
Edun said this during the 2024 budget interactive session with stakeholders at the Senate on Tuesday, December 5.
He explained that Nigeria’s fiscal space was exhausted in line with the International Monetary Fund’s (IMF) position.
He proposed a strategic shift towards concessional funding, including climate financing, as a viable solution.
“Nigeria’s fiscal space is exhausted. The solution is that we have to focus on concessional funding, the cheaper funding, even free funding, and climate financing is the way,” Edun stated.
He highlighted the urgency of addressing the fiscal constraints and reducing dependence on borrowing, particularly foreign borrowing.
Edun pointed out that with an estimated $1 trillion annually earmarked for climate change, the Nigerian government would plug up opportunities from the fund to finance deficits in the N27.5 trillion budget.
A new study shows that annual climate finance flows surpassed USD one trillion for the first time in 2021, six years after the Paris Agreement was adopted in 2015.
“Just yesterday UAE announced 30 billion dollars for climate action. What that means is that as we look to fund the N27.5 trillion budget this year, our first port of call must be the cheapest and the most concessionary financing including climate financing.
“We have to be brave, courageous and innovative to make sure that we use the financial market to take the stress down, to reduce our debt servicing, and to reduce our emphasis on borrowing,” Edun urged.
The minister highlighted recent strides, including the signing of a 100 million euro foreign direct investment for the reforestation of Mangrove Forests in Cross River.
He underscored the importance of maximizing existing assets without resorting to excessive borrowing.
He also pointed out the possibility of leveraging countries and organisations willing to allow funding based on their credit ratings, which could alleviate debt service burdens for Nigeria.
Edun further emphasized the need for Nigeria to quickly optimize its resources and make them align with the changing global dynamics that emphasize equity over excessive debt.
The 2024 budget proposed an aggregate expenditure of N27.5 trillion for the Federal Government in 2024, of which the non-debt recurrent expenditure is N9.92 trillion naira, while debt service is projected to be N8.25 trillion naira and capital expenditure is N8.7 trillion.
Earlier in his remarks, the Senate President, Godswill Akapbio, said Nigeria would not achieve much unless the country increased revenue.
He urged all revenue agencies in the country to do more and block all leakages.
“No matter how beautiful the budget is, if there is no money to spend, the budget will not work. Let’s get up and block the loopholes of leakages and wastages and then bring more revenue so that the 2024 budget becomes realistic”, he said.
The Senate president assured that the National Assembly was determined to pass the budget on record time and wanted to make sure the continue with the January to December budgetary cycle.
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.