THE Joint Senate Committee on the 2024-2026 Medium Term Expenditure Framework and Fiscal (MTEF) Strategy Paper has said Nigeria might need to borrow more loans to fund the 2024 budget.
The committee stated this on Thursday, November 16, at the ongoing hearing on the medium-term expenditure framework in Abuja.
It expressed worry over the inability of revenue-generating ministries, departments and agencies (MDAs) to meet their targets.
Sani Musa, the committee’s chairman, said the responses received so far from MDAs indicated that they might be unable to meet their revenue targets.
He said, “As regards the responses we are getting from MDAs, as finance committee, I am afraid if such targets will be met, if we will be able to fund the 2024 budget without going for more interventions; that is more loans”, Sani said during a meeting of the committee with Wale Edun, the minister of finance and coordinating minister of the economy, the director-general of the Debt Management Organisation (DMO) and chairman of the Federal Inland Revenue Service (FIRS).
He, however, said borrowing more loans would increase the deficit and debt servicing burden.
He also expressed concern over many leakages in the government’s revenue collection and use of its resources.
“I cannot believe that an agency will receive revenue in 2022 and is showing a collection receipt in October 2023. So, I don’t know how these collections are made and how they (Accountant-General of the Federal) issue receipts,” Musa stated.
According to Musa, the issuance of receipts has created room for misappropriation and mismanagement of funds and should be probed further.
He noted that the government was recording revenue shortfalls due to the issuance of waivers without clarity of benefits from such issuance.
Responding, Edun differed with him on going for more loans. He said Nigeria could not afford to rely on loans but needed to ramp up revenue.
“At our current status as a nation, we are clearly in no position to rely on borrowing. We have an existing borrowing programme. Our direction is to reduce reliance on borrowing, reduce the quantum and percentage of deficit financing in the 2024 budget.
“As you know, our debt servicing was pushing 98 per cent of revenue that the last thing to think of is piling more debt”, he added.
He stressed that the solution remained revenue.
“If you look at government spending, if you look at the budget as a percentage of GDP, it is one of the lowest, may be around 10 per cent. Even Ghana is at 25 per cent. The most advanced countries in terms of social safety nets and social security systems are at 70 per cent of GDP. So, we need to increase”, Edun said.
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.