From Juliana Taiwo-Obalonye, Abuja
The federal government has disclosed that it is set to present a supplementary budget to the National Assembly for the acquisition of COVID-19 vaccines and vaccination of frontline health workers.
The Minister of Finance, Budget and National Planning, Zainab Ahmed, made the disclosure at the maiden edition of the State House weekly briefing held at the Council Chambers briefing room at the Aso Rock Villa.
The weekly briefing is a platform put together by the presidential communication team to keep Nigerians abreast of various efforts by the Buhari adminstration to develop the country.
The platform is to play host to ministers and other top government functionarries weekly or bi-weekly to provide intensive updates on their activities.
The first edition focused on the eonomy and economic recovery.
Ahmed had in January said that there was no provision in the 2021 Budget to fund the acquisition of COVID-19 vaccines.
She had, however, informed that the federal government was working on the type and quantity of COVID-19 vaccines to procure, while her ministry and the Ministry of Health will meet to finalise an amount to be allocated for vaccine procurement.
Ahmed, responding to a question on if the government was planning to raise a budget for vaccines, said: ‘There will be a supplementary budget, the first one will be in March relating the COVID-19 pandemic, but we will also have a mid-year review like we did last year of the budget and if at the time we do the review and there is a need to go back to do any amendment for supplementary budget, at that time we will take that decision, if not, we will just report the review.’
The finance minister reassured that the country’s debt profile was still within sustainable limits once the country rolls out major infastructure and the economy start growing.
‘There is a lot of sensitivity in Nigeria about the level of borrowing by the government and it is not misplaced. And I said earlier that the level of borrowing is not unreasonable, it is not high. The problem we have is that of revenue. So, what we need to do is to increase revenue to be able to enhance our debt to GDP obligation capacity. If we say we will not borrow and therefore not build rails and major infrastructure until our revenue rises enough, then, we will regress as a country. We will be left behind, we won’t be able to improve our business environment and our economy will not grow.
‘So, it is a decision that every government has to take. Our assessment is that we need to borrow to build our major infrastructure. We just need to make sure that when we borrow, we are applying the borrowing to specific major infrastructure that will enhance the business environment in this country. Again, we all have to work, not just the federal government but state governments, to increase our revenue to enhance our debt service obligations. We also have to make sure that when we are choosing the projects, we are choosing carefully the ones that will enhance the business environment so that more revenue yields come into the treasury of the country.’
She revealed that total borrowing as at 31 of December is 21.6 per cent of GDP.
‘If we were not looking at adding the other category of loans that I mentioned, we don’t even need to increase that at this time. As at 2019, the debt to GDP ratio was 19.2 per cent so only two percent was added.’
Speaking on the impact of the rising price of crude oil, the finance minister said: ‘The more revenue we realise out of the budget, the less we borrow. As we see, the oil price rising provides us more revenue, it provides us some reliefs. We will be able to reduce our borrowing, so it is a positive thing for us and also we have a provision in the 2021 budget for immunisation. We are already releasing money to the health authority to start operation in the first batch of vaccines that is going to arrive the country in one week. But what we have in the budget is not enough; so, we are working with the health authorities to provide a plan that will be taken to the President for approval and to be taken to the National Assembly as a supplementary budget specifically for COVID -19 vaccination.’
Giving an update on loans from development partners, Ahmed said: ‘We closed 2020 by being able to realise $3.4 billion from IMF, $600 million from AfDB. We were not able to conclude our negotiation with the World Bank and also with the Islamic Development Bank. Even with Islamic Development Bank, we signed for the last tranches but for the World Bank, we started negotiation with the World Bank with the list of about 10 requirements that we needed to address and we had addressed those 10 requirements, but the World Bank’s position is that we have not sufficiently addressed the requirements relating to having a single exchange rate. Their view is that despite the fact that we have adjusted the official exchange rate from N305 to N360 and we further on moved to I&E (Investors and Exporters) or the NAFEX (Nigerian Autonomous Foreign Exchange Fixing) window, and, as we speak, federal government inflows and outflows are monitised at the NAFEX window rate. So, we feel we have met that requirement but the World Bank is saying that we have to close that gap between the black market and NAFEX window.
‘Our point is that is not what you do over night. It’s not that you wake up and make a pronouncement and that happens. It’s something that you have to do over time, taking several measures and working systematically for it to happen. So, we are still pushing our view with the World Bank and we hope to convince them that all requirement have been met and that they should now give us approval to go ahead and release the $1.5 billion that we have been discussing with the World Bank. But, having said that, the World Bank during 2020 has also given us approval for a number of facilities. One of them is the $500 million for metering system for the distribution network, $750 million for the power sector recovery programme and several other facilities that we have on table with the World Bank that were approved during the course of the year 2020.’
Ahmed said there are plans to get the Federal Executive Council to approve a memo to compel MDAs to buy Made in Nigerian goods.
‘The federal government is committed to buying Made in Nigeria products and buying Made in Nigeria vehicles in particular. So, we will be hoping to have a Federal Executive Council approval to compel federal government agencies to buy Made in Nigeria vehicles as much as is practicable. So when the security agencies need a security vehicle that is specially designed, and you don’t have it in Nigeria, we will still need to buy the ones that are outside.
‘We’re hoping to also engage the states and encourage the states to take similar measures. It is important for us because we want to make sure the automotive industry survives and grows. The Federal Ministry of Industry, Trade and Investment has just finished a review of automated policy, which has been running now for seven years. I must say that the policy has not been reviewed before, so this is the first review that is being done and the essence of the review is to see whether it has achieved the designed targets.
‘Once the ministry gets its approvals, then the review will be announced and perhaps there will be a refreshing of the measures that are contained in that policy.’
On the fears being expressed from certain quotas on Chinese loans, the minister said the loans are meant for capital projects.
‘If I may be permitted to speak to the question, I think it’s useful to look at the budget for each year; look at the revenues, look at the expenditure, if you take out the new borrowing, really, what will the size of the budget be? How much can government spend?
‘So, there will be a lot of capital projects that would be affected; so we need to look at it, what borrowing is, even as you see it in the budget every year, it’s used to support infrastructural development, otherwise, there’ll be a challenge.
‘Secondly, let me add, I think we’re going through a process where we need to borrow now, let’s just say in the short to medium term, to get the economy going, while we also expect revenue to improve. So, in terms of the pressure of debt service, by the time the revenue comes up, that should be lower, but there’s some things you need to do now to ensure that revenue comes up. So, we need to keep that in mind that if the economy grows and revenues improve, then debt service to revenue, in future, should be lower.’
Speaking about the Chinese loans, the Director-General, Debt Management Office (DMO) Ms Patience Oniha, said the country’s external debt as of today ‘is about $31 billion, out of that the loans from China is N3.2 trillion, just about 10% of the total. So, the first point is to say it is not as large or as huge as it’s been assumed. They are also concessional so they are long term and the pricing is cheap, if I may use that word, then you can see the infrastructure that it has financed, which the Honourable Minister has alluded to. So, what are we looking for? We’re looking for capital spending and those loans [are] supporting it.’
Ahmed said that the country was on its way to restoring consistent and stable growth, adding that Nigeria exiting recession faster than expected despite the impact of the COVID-19 pandemic was due to the fiscal and monetary policies as well as the Economic Sustainability Plan.