Why we’re exceeding borrowing plan to fund budget — Finance Minister

The Minister of Finance and National Planning, Zainab Ahmed, has said the federal government sped up and exceeded its borrowing arrangement to ensure disbursement of funds for capital projects.

The minister stated this when she appeared before the House of Representatives Committee on Finance on Wednesday.

Mrs Ahmed appeared alongside the Director General of Debt Management Office (DMO), Ben Akabueze, Acting Accountant General of the Federation, Okolieaboh Sylva and other officials.

The minister said as of August, the federal government borrowed N5.33 trillion, which is N430.82 billion above the limit for the month. She stated that as of July, the country also exceeded its borrowing plan by N1.26 trillion.

She explained that the over-borrowing was a deliberate plan to ensure that money is released early for capital projects.

“We are borrowing faster than what we had prorated. It was a conscious decision to make sure we have funds early enough to release for the implementation of capital projects,” she stated.

In the 2022 budget, the federal government proposed to borrow N6.1 trillion with N3.5 trillion from domestic sources and N2.5 trillion from foreign sources.

According to the minister, as of August, the government had borrowed N4.06 trillion from local sources, including from the Central Bank of Nigeria.

She said the government has, however reduced borrowing from foreign sources. As of August, she stated it had borrowed N510.2 billion from foreign sources, which is N1.2 trillion less than the planned target in August.

She explained that the country did not benefit from the high crude oil price, mainly because of oil theft and petroleum subsidy. She informed the lawmakers that subsidy remains the biggest threat to fiscal performance of the country.

Mrs Ahmed informed the lawmakers that the non-oil sector has performed above target. She stated that the sector now contributes 70 per cent of federal government revenue amidst poor performance of the oil sector due to oil theft.

The minister explained that as of August, oil contributed N395 billion (27 per cent performance), while non-oil has contributed N1.5 trillion (102.9 per cent). Some of the non-oil contributors include Company Income Tax of N826.27 billion (136 per cent) and VAT of N210 billion (99.6 per cent performance).

She explained that the Government-Owned Enterprises (GOE) have remitted over N1.3 trillion already.

“Efforts have been made to improve tax administration and collection. I must thank the committees of the Senate and the House for helping us in this regard by closely monitoring the performance of revenue-collecting agencies.

“The Finance Act 2020 that pegged the revenue to expenditure ratio at 50/50, has helped us greatly in rounding up revenue from government-owned agencies. This fact can be seen from the performance of GOE where we have realised N1.3 trillion. This is the first time we are able to achieve such a target. Three years ago, the average performance was N320 billion,” she said.

While responding to questions on farmers avoiding Nigerian ports, Mrs Ahmed said there is an ongoing effort to make the ports attractive for farmers.

She stated that the extension of rail lines to ports will help to address the challenges with exporting.

“On why our ports are not attractive, it’s a very big problem. The port congestion and the unfortunate reality is a lot of importers prefer to go to our neighbours.

“We have provided and bought some very large scanners. Our assessment is that it will help to fasten the clearing process and decongest the ports. The ports authority on their own is trying to reorganise ports to attain better efficiency, including control of entry and exit to the ports.

“The rail line from Lagos to Abuja is also being extended so that containers— even before inspection—can be taken out of the Apapa ports to some other locations for inspections to be done. This will enable Nigeria to attract its own business,” she said.

After her presentation, the committee went into an executive session with the officials.

The Minister of Finance and National Planning, Zainab Ahmed, has said the federal government sped up and exceeded its borrowing arrangement to ensure disbursement of funds for capital projects.

The minister stated this when she appeared before the House of Representatives Committee on Finance on Wednesday.

Mrs Ahmed appeared alongside the Director General of Debt Management Office (DMO), Ben Akabueze, Acting Accountant General of the Federation, Okolieaboh Sylva and other officials.

The minister said as of August, the federal government borrowed N5.33 trillion, which is N430.82 billion above the limit for the month. She stated that as of July, the country also exceeded its borrowing plan by N1.26 trillion.

She explained that the over-borrowing was a deliberate plan to ensure that money is released early for capital projects.

“We are borrowing faster than what we had prorated. It was a conscious decision to make sure we have funds early enough to release for the implementation of capital projects,” she stated.

In the 2022 budget, the federal government proposed to borrow N6.1 trillion with N3.5 trillion from domestic sources and N2.5 trillion from foreign sources.

According to the minister, as of August, the government had borrowed N4.06 trillion from local sources, including from the Central Bank of Nigeria.

She said the government has, however reduced borrowing from foreign sources. As of August, she stated it had borrowed N510.2 billion from foreign sources, which is N1.2 trillion less than the planned target in August.

She explained that the country did not benefit from the high crude oil price, mainly because of oil theft and petroleum subsidy. She informed the lawmakers that subsidy remains the biggest threat to fiscal performance of the country.

Mrs Ahmed informed the lawmakers that the non-oil sector has performed above target. She stated that the sector now contributes 70 per cent of federal government revenue amidst poor performance of the oil sector due to oil theft.

The minister explained that as of August, oil contributed N395 billion (27 per cent performance), while non-oil has contributed N1.5 trillion (102.9 per cent). Some of the non-oil contributors include Company Income Tax of N826.27 billion (136 per cent) and VAT of N210 billion (99.6 per cent performance).

She explained that the Government-Owned Enterprises (GOE) have remitted over N1.3 trillion already.

“Efforts have been made to improve tax administration and collection. I must thank the committees of the Senate and the House for helping us in this regard by closely monitoring the performance of revenue-collecting agencies.

“The Finance Act 2020 that pegged the revenue to expenditure ratio at 50/50, has helped us greatly in rounding up revenue from government-owned agencies. This fact can be seen from the performance of GOE where we have realised N1.3 trillion. This is the first time we are able to achieve such a target. Three years ago, the average performance was N320 billion,” she said.

While responding to questions on farmers avoiding Nigerian ports, Mrs Ahmed said there is an ongoing effort to make the ports attractive for farmers.

She stated that the extension of rail lines to ports will help to address the challenges with exporting.

“On why our ports are not attractive, it’s a very big problem. The port congestion and the unfortunate reality is a lot of importers prefer to go to our neighbours.

“We have provided and bought some very large scanners. Our assessment is that it will help to fasten the clearing process and decongest the ports. The ports authority on their own is trying to reorganise ports to attain better efficiency, including control of entry and exit to the ports.

“The rail line from Lagos to Abuja is also being extended so that containers— even before inspection—can be taken out of the Apapa ports to some other locations for inspections to be done. This will enable Nigeria to attract its own business,” she said.

After her presentation, the committee went into an executive session with the officials.