Tag Archives: Budget Deficit

Budget Deficit: FG Will Only Borrow From Lowest Cost Debt Providers – Adeosun

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The Minister of Finance, Mrs Kemi Adeosun, said the Federal Government would only borrow from the lowest cost debt providers to fund the deficit in the 2016 budget.

 

Adeosun said this on Thursday in Abuja while addressing the Senate Committee on Appropriation, chaired by Sen. Danjuma Goje.

 

She said that the decision was for government to easily service the debts as high cost debts would be counter productive in view of the nation’s economic realities.

“We know that there is a need, because of the budget deficit, to borrow but what I will like to assure you is that borrowing is going to be responsible as possible.

“What we have done is to approach the lowest cost debt providers first; we have secured loan with the China Exim bank at less than two per cent.

“We have secured loan facility with World Bank 1.5% concessioner loan with long moratorium period before we have to start repaying and at low interest rate,” she said.

The minister added that the ministry had made some projections around the nation’s revenue beyond the use of the sources of revenue which were oil proceeds, customs and taxes.

 

She said that to fund the 2016 budget, independently generated revenue would be quite significant in financing it.

 

“We believe that is one of the opportunities that the lower price has given us that we are now focusing on the non-oil revenue.

“We are aggressively looking at ministries, departments, agencies on board to understand what their true revenue base is and to know how much they are contributing to the wider economy.

“We have set in process in the ministry of finance a very rigorous framework of revenue management and to actually monitor revenue.

“We are beginning to roll those out into other agencies of government that collect revenue of any description,” she said.

FG To Raise N5bn Via Eurobond, Others To Plug Budget Deficit

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The Minister of Finance, Mrs. Kemi Adeosun, has said that the Federal Government would raise about $4.5 billion from multiple external sources, including the Eurobond market, to plug its budget deficit.

 

The Minister speaking over the weekend at the KPMG CFO Forum held at Eko Hotel in Lagos said the aim was to overcome the country’s worst economic crisis in years through a record budget.

 

Nigeria, Africa’s biggest economy and top oil producer is still reeling from the fall in crude revenues, which before now accounted for the source of 95 percent of its foreign earnings, leading to the naira hitting record lows on the parallel market amid dwindling foreign exchange reserves.

 

According to Adeosun, “Our total borrowing expectations are now at N1.8 trillion ($9.1 billion) and we hope to raise approximately $4.5 – 5 billion from multiple external sources. This includes multilateral agencies, export credit agencies as we are also planning to tap the Eurobond market,”

 

She noted that the government was optimistic that it would receive the desired support after cutting government costs and improving revenue collection adding that the Muhammadu Buhari administration, intends to achieve this through four keys.

“We shall stimulate the economy to achieve a real GDP growth rate of 4.2 per cent in 2017; reduce cost of governance, extract efficiencies in the public service and enhance collection of internally generated revenue. Government would also increase infrastructure development and be able to fund the budget deficit and negate trade balance cost effectively,” she said.

According to her, the contentious issue of the exchange rate policy that will complement the fiscal policy of this administration will be a product of determining the real equilibrium exchange rate path of the naira. “The finance ministry expects that the monetary policy authorities will be in a position to determine the steps required to put the currency in equilibrium after considering a number of variables,” she added.

 

She noted that other prongs of government’s economic plan included greater coordination of fiscal and monetary policy, initiatives to achieve broad improvements in overall business environment, specific policy initiatives to catalyse Medium, Small Micro Enterprises (MSME) of 50 per cent GDP growth.

 

This the Minister said, would be actualised through tax harmonisation and incentives, inclusivity through increase in share of business awarded to MSME from government and social welfare programme to support lowest income demographics.

 

“In all, the target outcome is to achieve a real GDP rate of 4.2 per cent, infrastructure development to unlock economic growth, diversification the economy and growth of the non-oil sector, improvement in overall business environment and improvement in key socio-economic indicators,” she said.

 

She noted that there would be increased capital spending to address infrastructure deficit as government would increase expenditure on infrastructure to 30 per cent of total expenditure from the 10 per cent it was in 2015. “There would be investment of N1.8 trillion in transport, roads, housing, power and health; Selective use of private capital through PPPs with substantial increase in gross capital formation, enablement of industrialization and increased competitiveness of business coupled with acceleration of GDP growth, job and wealth creation,” she stated.

 

Credit: Today