Wale Edun, Nigeria’s Minister of Finance and Coordinating Minister of the Economy, emphasized the impracticality of relying solely on borrowing to finance Nigeria’s 2024 budget.
He highlighted the need for a different approach during his appearance before the joint Senate Committee on the 2024-2026 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) in Abuja on Thursday.
Edun stressed that Nigeria’s best path to funding its budget was by channeling resources into infrastructure development to enhance revenue generation.
“In the current global and national economic environment, relying on borrowing is not a feasible option. We have an existing borrowing profile, and we aim to curtail deficit financing in the 2024 budget,” Edun stated.
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Citing the international scenario, he noted that many affluent nations were directing their efforts toward reducing inflation rates to stabilize economies and foster investment growth. However, this effort often led to increased interest rates, making access to funds expensive.
He continued, “The available funds are expensive; therefore, it is the last resort that we must rely on. Debt servicing currently consumes about 98% of government revenue. Accumulating more debt is the least advisable option.”
Edun highlighted the importance of increased government spending, citing Nigeria’s comparatively low budget as a percentage of GDP. He emphasized that Nigeria’s spending stood at 10%, whereas even Ghana was at 25% and richer countries maintained significantly higher proportions, with some as high as 50% to 70% of their GDP.
The Minister stressed the necessity of augmenting revenue sources, emphasizing that government spending would likely lead to an increase in revenues in the short to medium term.
However, Sani Musa, Chairman of the committee, expressed concerns about the revenue projections provided by government Ministries, Departments, and Agencies, which appeared lower than the federal government’s projections for 2024.
The discourse highlighted the importance of strategic fiscal planning and diversification of revenue streams for Nigeria’s economic stability and development in the forthcoming fiscal year.
