Minister Warns Against Continued Borrowing For 2024 Budget Amid Soaring Debt Crisis

Daud Olatunji

Finance Minister Wale Edun issued a stark warning on Thursday, emphasizing the detrimental impact on Nigeria’s growth if the country persists in relying on loans to fund its budget.

 Edun’s concern stems from the nation’s escalating debt profile compounded by a decline in revenue.

Edun delivered this message during his appearance before the joint Senate Committee tasked with examining the 2024-2026 Medium Term Expenditure Framework and Fiscal Strategy Paper. 

Chaired by Senator Sani Musa, the session also featured the presence of key figures such as Zacch Adedeji, the Executive Chairman of the Federal Inland Revenue Service (FIRS), and Patience Oniha, the Director General of the Debt Management Office.

Proposing a strategic shift, Edun urged lawmakers to prioritize investing in infrastructure as the primary means to fund annual budgets. Quoted by Channels TV, he stated,

 “Our direction of tariff is to reduce the quantum of borrowing or intercepting deficit financing in the 2024 budget,” underscoring the unsuitable economic environment for continued reliance on borrowing.

Edun highlighted the challenges posed by the current global and national economic conditions, citing the contraction of economies, rising interest rates, and the incompatibility of high-interest rates with investments. 

Stressing the expense of accessing funds through borrowing, he asserted that accumulating more debt was the last resort, considering that debt servicing already consumes 98% of government revenue.

“The government needs to not just maintain its activity, it needs to spend more,” Edun emphasized, pointing out that Nigeria’s government spending as a percentage of GDP is among the lowest at 10%, compared to Ghana’s 25% and wealthier nations at 50%.

In September, SaharaReporters brought attention to the rising debt crisis in Nigeria, with the Civil Society Legislative Advocacy Centre (CISLAC) accusing the President Bola Tinubu-led government of indifference. CISLAC’s Executive Director, Auwal Ibrahim Musa (Rafsanjani), expressed deep concern over the country’s 75% surge in debt, reaching a staggering N87 trillion. 

This alarming increase of N37.53 trillion since March 2023 has significant fiscal implications, particularly as Nigeria grapples with managing debt interest payments amid the anticipated monthly savings of approximately N400 billion from fuel subsidy removal.

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