Amid growing concerns over debt profile, the Minister of Finance, Budget and Planning, Mrs Zainab Ahmed, has said the dual reality of COVID-19 pandemic and the drop in the price of oil in the international market has made it inevitable for Nigeria to keep borrowing from external bodies.
She stated that before the global health and economic challenges, Nigeria had been grappling with low revenue, noting that the crises had put the country in a difficult situation, which had made it difficult for the government to meet some of its obligations.
The minister spoke recently at a webinar organised by the Nigerian Economic Summit Group, Fiscal Policy Roundtable and Tax Investment and Competitiveness Policy Commission and was anchored by a tax expert, Taiwo Oyedele, who is the Fiscal Policy Partner and West Africa Tax Leader at PricewaterhouseCooper.
The minister, who was represented by the Special Adviser to the President on Finance and Economy, Mrs Sarah Alade, said government was doing its best to make sure the revenue base was broadened and expenditure reduced. She noted that if citizens also participated by paying taxes and doing the right things, it would go a long way in solving the country’s problems, especially raising revenues.
Meanwhile, many economists and prominent Nigerians have expressed reservations over the country’s rising debt liabilities.
As of March, the Vice Chairman, Senate Committee on Local and Foreign Debts, Senator Muhammad Enagi, said the country’s total debt would have risen to about N33tn after the Senate approved the President’s request to take another $22.7bn foreign loan.
But, Ahmed said, “We’ve had to grapple with low revenue, even before the pandemic. We had high debt, weak infrastructure base, low human capital and low revenue that is largely dependent on the foreign exchange earned from oil. So, there are many things we have loved to do that we cannot do.
“Due to the global economic slowdown and the revenue issues, what we are expecting is a GDP that would contract, in the best case scenario, by about 4.4 per cent and in the worst case scenario, it could be about eight per cent or more.
“We are in a very difficult situation but we are trying to manage that because if nothing is done, up to about 21 million jobs could also be affected by the impact of the pandemic. So, with all these statistics, we cannot overemphasise the importance of raising revenue.”
She said in addressing the situation, government had come up with key fiscal measures that government could not but borrow to accomplish. She identified them to include the 12-month economic sustainability plan to mitigate the effect of COVID-19; measures to support the private sector, which includes the implementation of the Finance Act 2020 aimed at supporting MSMEs and strategic industries affected by the pandemic.
She added, “We also have the establishment of an N86bn intervention fund for health infrastructure; conversion of World Bank Regional disease surveillance system enhancement programme to support COVID-19 intervention in the states; accelerating infrastructural development; preparation of a Fiscal Stimulus Bill to provide legislative backing for the fiscal stimulus packages that we have; deregulation of the price of refined petroleum products – we know how important that is, given the amount of money that we spent in that area.
“We also have the adoption of financing plan for the power sector recovery programme; incentivising the use of up to N2tn of pension funds for roads and housing development, supporting and encouraging states to achieve state fiscal transparency and accountability, sustainability and other World Bank programme actions in order to access external support and we are collaborating with state governments on affordable mass housing.
“To achieve all these, we will have to keep mobilising external funding and seek debt relief. We continue to engage with the multilateral and donor agencies to access additional funding for crisis response, we seek moratorium from official partners for some of the loans that we have and support arrangement to secure commercial debt relief.
“If the revenue had performed, then we probably will not be seeking this much support from external sources, we know we cannot but keep working at generating more revenue so that the economy can be better for it.”
Other panellists were the Chairman, Nigeria Governors’ Forum, Dr Kayode Fayemi; Chairman, FIRS/JTB, Muhammad Nami; IMF’s Senior Resident Representative for Nigeria, Jesmin Rahman; and the Country Director, Bill and Melinda Gates Foundation, Mr Paulin Basinga.