A statement by the Finance Ministry in Abuja on Thursday, said the Nigeria’s Federal Government will continue borrowing to fund the 2017 budget of N7.44tr signed into law last month.
The clarification followed a statement by Mrs. Kemi Adeosun, the Finance Minister that the nation’s economy “cannot borrow anymore,” raising fears about how Nigeria would fund the spending plan and about the planned foreign loans of $2 billion from institutions like the World Bank to help the country spend its way out of recession.
According to the statement said: “We have headroom to borrow and are doing so aggressively in the short to medium term in order to address our infrastructure deficit and to stimulate growth.
“At the same time, it is vital that Nigeria diversifies its revenue base and builds its revenue profile,” it said. That would “ensure that we do not continue to overly rely on debt to fund our budget spending over the long term.”
To reduce the need for debt, the Federal Government plans to increase the country’s tax collection revenues to at least $1bn from a scheme that will give tax evaders a chance to make payments retroactively.
Reuters recalled that in March the Federal Government laid out plans to increase the overall of tax to gross domestic product to 15% by 2020 from the current 6%.
The plan projects a deficit of N2.21tr, implying a deficit equivalent to 2.18% of the country’s GDP.