Minister of Finance, Mrs. Kemi Adeosun, has said the country has no choice but to continue borrowing to implement the Federal Government’s Economic Recovery and Growth Plan (ERGP).
Adeosun said this in a statement signed by the Director of Information, Federal Ministry of Finance, Mr. Salisu Dambatta, on Thursday in Abuja. The Minister said this following recent report on comments she allegedly made about Nigeria’s debt strategy and ability to borrow.
Adeosun was quoted to have warned that the country must not borrow more to fund its budget and should instead raise money internally to fund the budget.
“Nigeria will continue to borrow. Nothing has changed. The ERGP provides for an increase in spending over a three-year period, which is reflected in the 2017 budget.
“In 2017, the government is committed to spending N7.44 trillion, with a projected fiscal deficit of N2.356 trillion, which will be funded by a combination of domestic and international borrowing.
“Nigeria’s debt to GDP ratio is low when compared to our contemporaries in Africa, and across most of the developed world. We have headroom to borrow and are doing so aggressively in the short to medium term in order to address our infrastructure deficit and to stimulate growth,” she said.
Adeosun said that in addition to borrowing, the government was working towards having a diversified revenue base to ensure that the country does not continue to overly rely on debt to fund the budget.
“To build a sustainable economy, we must replace the debt we are incurring in the short to medium term, with strong revenue sources. That is why the Ministry of Finance is focused on expanding our tax base, which we are doing with a range of initiatives including the Voluntary Asset and Income Declaration Scheme.
“Also, the recruitment of Community Tax Liaison Officers is to improve tax compliance in the long-term, and we are heavily focused on making government spending more productive and efficient.
“Nigeria cannot rely on debt indefinitely. We must be focused on a future where we can earn enough internal revenue to spend on the projects that will grow our economy,” she said.
Adesoun said that for now, however, increased spending, funded by debt, would act as a stimulus for growth.