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Explore non-debt means to finance budget — Experts task FG

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Economic experts have urged the Federal Government to look for  non-debt means to finance the nation’s annual budget toward reducing deficit and borrowing now on the increase in Nigeria.

The experts made the plea on Thursday in Ibadan at the Budget Seminar 2023.

It was organised by the Department of Economics, University of Ibadan, in conjunction with the university”s Eco Alumni Council.

The Interim Chairman, UI Eco Alumni Council, Dr Ayo Teriba, said that Nigerian budget, as it is, was unrealistic, hence the need to explore other non-debt means to ensure its realisation.

According to Teriba, most of the time, budget revenue is inflated and we really cannot get that level of revenue.

“This year, we are looking at N10 trillion and last year was N7 trillion and our expenditure is also very high.

“Nigeria has to think of how to move away from borrowing, because the level of our debts has gone up to about N77 trillion.

“We should be more creative with the way we finance our budget. In doing this, Foreign Direct Investment (FDI) should be stressed,” he said.

Also, Prof. Adeola Adenikinju, Head of Economics, Department, University of Ibadan, said, “when FDI is employed, it comes with new technology.

“Because, you are trying to get foreign capital to come in and invest to create jobs, value addition and so on.

“And, if the environment is very conducive, it will lead to having a more stable income for the country. FDI is not very volatile, unlike foreign portfolio investments or exports.

“We are sitting on a lot of assets and if we properly value them, foreigners can buy shares, they acquire equity and then, that will bring in more money for the government; so, these are non-debt ways to finance the budget.”

On difficulty encountered in the repatriation of funds, Adenikinju said if the country was going to do FDI, then, it must create an environment that would facilitate it.

“If you want to attract people, you must also assure them that they can take their money away. We need to put certain measures in place that will support more Foreign Direct Investment,” Adenikinju said.

In his remarks, Prof. Lanre Olaniyan, Dean, Faculty of Economic and Management Science, University of Ibadan, said that the seminar was to look at the workability of the 2023 Budget.

“The challenges have been highlighted as well as the headwinds that can create problems.

“We have discussed that some of the assumptions made for the budget are impracticable, especially concerning the budgeted revenues, as there are possibilities that Nigeria would not be able to achieve them.

“The deficit position and the issue of debts service and borrowing that are embedded in the budget are serious challenges.

“The summary is that past experiences have shown that we may not attain the target set on the budget.

“The seminar also identified that many of the issues that were in the National Development Plan (NDP) 2021 to 2025, which the budget is expected to contribute to, have not been done.

“So, the budget appears to be working differently from what the NDP thinks it should,” Olaniyan said.

He said that when the budget was prepared, it has to be in sync with the population structure.

“Why we have a low tax-to-revenue base is because we are not considering the proportion of Nigerians that are working.

“Only 17 per cent of Nigerians are employed and it is their income that we are taxing, then, we can only expect that tax revenue to GDP will be low.”

Also, Dr Afolabi Olowookere, said that Nigerian budget was small, though it rose from N5.07 trillion in 2015 to N21.83 trillion in 2023, it has yet to be sufficient to cater for the size of the nation’s economy, if compared to other nations.

Olowookere said analysis of the budget showed that Nigeria spent a lot on administration and security and less on the economy, adding that this needs to improve.

“The size of the Nigerian budget has risen significantly over the years, but when compared to the size of the economy, Nigeria’s budget is relatively small.

“Nigeria needs to spend more, therefore, it needs to earn more in terms of taxes and efficient administration, otherwise the deficit can become unsustainable.

“The country needs to optimise the relationship between capital and recurrent expenditure.

“Plug leakages and prioritise projects to ensure impact assessment as well as leverage the private sector in the provision of basic infrastructure,” he said.

In his remarks, Prof. Ibi Ajayi, the Chairman of the event, also a retired Professor of Economics, said that government must cut wastage and ensure transparency.

Ajayi said that insecurity must also be tackled, and as well follow the rules and regulations of Economic Laws for a robust economy.

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MDAs remitted N835.7bn revenue to FG in February – Minister

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The Minister of Finance and the Coordinating Minister of Economy, Wale Edun, has disclosed that the revenues of government-owned enterprises, ministries, departments and agencies increased to N835.70bn in February.

This figure indicates a growth of N681.45bn or 441.78 per cent from N154.25bn MDAs remitted in the same period of 2022.

The minister stated this during a presentation titled “Reconstructing the Economy for Growth, Investment and Climate Resilience Development,” delivered at the Lagos Business School Breakfast Club, which was obtained by our correspondent.

Edun said the government had automated a two-time daily sweep of 50 percent of MDAs and GOEs internally generated revenue since January 2, 2024, leading to more remitted earnings.

“There is an increasing revenue contribution of MDAs and GOEs, growing from 154.25 in February 2023 to 835.70bn in February 2024 through an automated two-times daily sweep of 50 per cent of MDAs and GOEs IGR since January 2, 2024,” he stated.

Recall that in December 2023, the Federal Government, through the Ministry of Finance, directed all MDAs to remit 100 percent of their internally generated revenue to the Sub-Recurrent Account, which is a sub-component of the Consolidated Revenue Fund.

The government stated in a circular that the directive was to improve revenue generation, fiscal discipline, accountability, and transparency in the management of government financial resources and prevent waste and inefficiencies.

“All Ministries, Departments, and Agencies that are fully funded through the annual Federal Government budget (receiving personnel, overhead, and capital allocation) and on the schedule of the Fiscal Responsibility Act, 2007 and any addition by the Federal Ministry of Finance should remit 100 per cent of their internally generated revenue to the Sub-Recurrent Account, which is a sub-component of the Consolidated Revenue Fund,” the circular read.

The finance minister emphasised that augmenting revenues was a crucial aspect of a comprehensive execution strategy aimed at achieving a 78 per cent year-on-year rise in budgeted revenue for 2024.

He underscored the importance of implementing an upgraded government revenue assurance model, adding that the target was to reduce the budget deficit from 6.1 per cent of GDP in 2023 to 3.9 percent.

“We have set out a robust execution plan for a 78 percent y-o-y increase in budgeted revenue in 2024, but implementing enhanced the government’s revenue assurance model is critical with a target budget deficit of 3.9 per cent of GDP from 6.1 per cent in 2023.”

Edun underscored the government’s strategy of increasing the pricing of government securities, which had successfully attracted dollar inflows but at a higher cost to the government.

He further stated that the government had revamped the process for the commencement of 2024 capital expenditure payments by MDAs and GOEs through direct payments to contractors and employed prudent measures to minimise redundancy and reduce leakages through digitisation.

He said, “We have taken prudent expenditure measures by minimising unnecessary redundancy, reducing leakages through digitisation and eliminating inefficiencies. There is also a revamped process for the commencement of 2024 capital expenditure payments for MDAs and GOEs, which is through direct payments to contractors while promoting a government-wide cost curtailment culture across all MDAs & GOEs.”

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Naira makes huge recovery, gains 7.2% against dollar

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The Naira on Friday experi enced huge appreciation at the official market, trading at N1,142.38 to the dollar.

Data from the official trading platform of the FMDQ Exchange, a platform that oversees the Nigerian Autonomous Foreign Exchange Market (NAFEM), revealed that the Naira gained N88.23.

This represents a 7.16 percent gain when compared to the previous trading date on Monday, April 8, exchanging at N1,230.61 to a dollar before the Sallah holiday.

The total daily turnover increased to $281.34 million on Friday up from $125.55 million recorded on Monday.

Meanwhile, at the Investors and Exporters (I&E) window, the Naira traded between N1,265 and N1,100 against the dollar.

Economic experts have continued to praise both fiscal and monetary policies of President Bola Tinubu’s administration responsible for the steady Naira appreciation.

The CBN, during its policy meetings held in February and March, implemented a total of 600 basis points in interest rate increases.

This helped tackle dollar scarcity, reduced volatility, and decreased reliance on parallel markets.

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Money market

Naira makes huge recovery, gains 7.2% against dollar

Published

on

The Naira on Friday experienced huge appreciation at the official market, trading at N1,142.38 to the dollar.

Data from the official trading platform of the FMDQ Exchange, a platform that oversees the Nigerian Autonomous Foreign Exchange Market (NAFEM), revealed that the Naira gained N88.23.

This represents a 7.16 per cent gain when compared to the previous trading date on Monday, April 8, exchanging at N1,230.61 to a dollar before the Sallah holiday.

The total daily turnover increased to $281.34 million on Friday up from $125.55 million recorded on Monday.

Meanwhile, at the Investor’s and Exporter’s (I&E) window, the Naira traded between N1,265 and N1,100 against the dollar.

Economic experts have continued to praise both fiscal and monetary policies of President Bola Tinubu’s administration responsible for the steady Naira appreciation.

The CBN, during its policy meetings held in February and March, implemented a total of 600 basis points in interest rate increases.

This helped tackle dollar scarcity, reduced volatility, and decreased reliance on parallel markets.

Continue Reading

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