Federal government has said that Nigeria is not broke. As a result of its conviction that the economy is on the right path, the government boasted that it was not contemplating debt restructuring or seeking debt relief as it is still capable of meeting its debt payment commitments as and when due. Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, said this at a news conference in Abuja while presenting the scorecard of the Buhari administration in the finance sector from 2015 to 2022. Ahmed pointed out that thought he country does not generate enough revenue to meet its obligations in all sectors of the economy due to continued oil theft in the Niger Delta, the rising revenue from non-oil sector has been effectively and judiciously managed to sustain the economy.
According to her, Nigeria does not need to either restructure its debt or seek for debt relief given the fact that it is following its debt management strategy closely at all times. Zainab said, “we do not have to restructure because we have a debt strategy we are following closely. We make provision for debt servicing in our budget as a first line charge so that we do not default in any loan settlement be it external or local. And we have projections in meeting our loans settlements in the short and medium terms. This is the medium plan and it is frequently revised. So we are comfortable in terms of our ability to pay our debts. We have no fears about what is happening. So we are not going for any debt relief and we are not going for any debt restructuring. We continue to generate revenue on a monthly basis and these revenues are distributed at FAAC. Again, to continue with the tradition of transparency we actually disclose how much is distributed on a monthly basis to the various tiers of government. We have witnessed a significant increase in non-oil revenue. While oil revenue is underperforming because of criminality, the NNPC has reported that the criminality has been curtailed and we are already beginning to see the pick-up in the production volumes which is that more revenue has begun to come to the Federation Account.
“But it is not enough to cover all we need and that is why in the budget we make room for deficit. Our borrowings have been practical. They are sustainable and are guarded by debt management strategies. The debt management is being followed religiously. Our debt is sustainable: 33% to GDP. We are still the lowest in terms of debt to GDP. But again, I say we do have a revenue problem despite the increase in revenue because our performance of eight percent of GDP, the revenue outturn is not enough. We are a population of 200million people. We have a lot of demand on government both states and federal to provide service. But our consumption level is low so we have to keep working to find out how we can incentivise and enhance the business environment so that small business enterprises that should be largest employer of labour and should be the largest contributors to GDP, can continue to grow. It is for that reason that we have reduced income taxes for the smallest businesses. And also reduce the taxes for medium businesses from 30% to 22% so that they can generate reasonable revenues to stabilise their businesses,” the finance minister explained.
On capital budget release in the 2022 budget, the minister announced that the sum of N1.7 trillion had so far been released out of the N2.7 trillion earmarked for capital project this year. On the payment of the arrears of 13% derivation to oil-bearing states in the country, the minister confirmed a report by one of the governors that the payment had indeed begun in earnest and that it would be completed within a 60-month window as mutually agreed between the federal government and the benefiting states due to financial constraints. The minister further said, “these releases are not just starting now. In my report you saw that it occurred in several periods but the recent one we negotiated to disburse it over 60 months’ period and we just started that about two months ago. So, basically the governor was not sharing information on the recent one. But there are some that have been disbursed and concluded.
“We took the pain to negotiate 60 months because of the tariff fiscal rate. So the disbursement is from the savings of the federation account. We did that to ensure that other tiers of the government do not suffer when we pay the arrears from the Federation Account,” the minister explained. The Minister of Information, Alhaji Lai Mohammed, who coordinated the press briefing, praised the Buhari government for its support to states to bail them out of serious economic hardship since coming to power. He boasted that no administration had been more magnanimous to states than the Buhari administration since the return to democratic rule and should he applauded for that.
Mohammed said: “I make bold to say that no Administration, since the beginning of the current political dispensation in 1999, has done more than the Buhari Administration in supporting states with all sorts of financial interventions. “When the Administration assumed office in 2015, at least 27 states could not pay salaries. Imagine what would have happened if Mr. President had not offered a helping hand, without discrimination, to the states? But for Mr. President, most of the states would have been plunged into serious socio-economic crisis, with dire consequences for the country. Please note that the support to the states came at a time when national resources had dwindled drastically, and also at a time of competing needs in many areas, including infrastructure, security, global pandemic, etc.,” Mohammed boasted.
