Minister of Finance stresses the imperative of revenue generation over continued borrowing

The Minister of Finance and Coordinating Minister for the Economy, Wale Edun, emphasized on Thursday that Nigeria cannot sustain its reliance on borrowing to fund budgets. Edun highlighted the urgent need for increased revenue to address the nation’s high deficit financing.

Appearing before the joint Senate Committees on Finance, Appropriations, National Planning, and Local and Foreign Debts to scrutinize the 2024–2026 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP), Edun asserted that Nigeria must make necessary sacrifices to generate adequate revenues, reducing the current reliance on borrowing.

Edun, flanked by the Executive Chairman of the Federal Inland Revenue Service (FIRS), Mr Zacch Adedeji, and the Director General of the Debt Management Office (DMO), Ms Patience Oniha, highlighted the importance of spending on infrastructure that can generate revenues to fund annual budgets.

He expressed concern about the increasing interest rates in advanced countries, making foreign loans more expensive for developing countries like Nigeria. Edun stated, “Clearly, in the environment that we have now, internationally as well as nationally, we are in no position to rely on borrowing.”

Edun outlined the challenges associated with accessing foreign loans, given the current international focus on reducing inflation rates to stabilize economies. He stressed the need for alternative approaches to financing, citing the limitations posed by high interest rates on foreign loans.

The minister highlighted the existing debt profile and the necessity to intercept deficit financing in the 2024 budget. He emphasized the importance of government spending, pointing out that Nigeria’s budget as a percentage of GDP is relatively low compared to other countries. Edun underscored the need for revenue generation as the primary source of funding, especially in the short and medium term.

Chairman of the joint panel, Senator Sani Musa, expressed concerns about the disparities between revenue projections from ministries, departments, and agencies (MDAs) and the Federal Government’s proposed income for the 2024 fiscal year. Senator Musa emphasized the need to address revenue leakages, delayed remittances by MDAs, and the issue of waivers.

The senator raised questions about the customs modernization project (e-customs) and sought details on agreements and expected revenue. The committee expressed a commitment to understanding and addressing challenges to avoid a deficit budget in the coming year.