Federal Government of Nigeria has said that it would finance the N5.36 trillion budget deficit through domestic, foreign loans and proceeds from privatisations. This was disclosed by the Minister of Finance, Zainab Ahmed after the Federal Executive Council meeting on Wednesday.
The Minister told Reuters that the cabinet approved a revised budget of N10.52 trillion at the meeting, against the N10.59 trillion approved earlier. Ahmed added that expenditures related to COVID-19, which was not included in the budget, has been added to it.
The revised budget, which requires the approval of the National Assembly, was based on assumption that crude oil price would be at $25 per barrel, the output of 1.94 million barrels per day and an exchange rate of N360 to $1.
Meanwhile, it appears the government has changed its mind over budget reduction, as it acted differently from what it said about two months earlier. The finance minister had said in March that the N10.59 trillion budget would be reduced by 15% due to the global oil prices crisis, which is about N1.58 trillion. But Ahmed announced only a reduction of N71.5 billion only.
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She told Reuters that the deficit would be part-financed with loans from the International Monetary Fund (IMF). the World Bank, Islamic Development Bank and Afrexim Bank.
Meanwhile, Nairametrics had reported when the Director-General of the Bureau of Public Enterprises (BPE), Alex Okoh urged the government to stop financing budget deficit every year with borrowings from foreign and local loans. According to him, it would be best for the budget deficit to be funded by proceeds from the sale of moribund national assets.
Okoh, who stated this during an interactive session between his agency and the Senate Committee on Privatisation said that there were national assets that could be converted into a liquid for that purpose instead of taking foreign and local loans.
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“It is not good to keep on borrowing on a yearly basis to finance deficit budget when a lot of very valuable national assets are lying fallow and moribund. Proceeds from outright privatisation or concession of the moribund assets should serve as the best alternative in funding yearly budget deficits since the assets are more or less becoming national liabilities.
“There are about 600 state-owned enterprises in the country which gulp not less than $3 billion on a yearly basis with little or no returns into the public purpose,” he said.
Taking loans with no sustainable source of income is irresponsible for anyone including Nigeria. It’s time to slash the budget by 50% since that’s the approximate percentage that us recurrent expenditure and consolidate alternative sources of revenue. From previous experience privatisation has never yeilded significant positive results in Nigeria. So if this is the plan Nigerian government has … it’s so sad.
I think the article headline should be better put as, Nigeria is Broke, Announces sellout plans