ABUJA—The Federal Government has said it would continue to borrow, contrary to the earlier widely reported position of Minister of Finance, Mrs. Kemi Adeosun.
She was quoted as saying at Tuesday Business Forum at the Presidential Villa in Abuja: “We cannot borrow anymore. We just have to generate funds domestically enough to fund our budget; mobilise revenue to fund the necessary budget increase.”
However, a statement by Director of Information, Federal Ministry of Finance, Mr. Salisu Na’Inna Dambatta, yesterday, said: ”Nigeria will continue to borrow. Nothing has changed. The Economic Recovery and Growth Plan, ERGP, provides for an increase in spending over a three-year period, which is reflected in the 2017 budget.
“In 2017, the government is committed to spending N7.44 trillion, with a projected fiscal deficit of N2.356 trillion, which will be funded by a combination of domestic and international borrowing.
“Nigeria’s debt to GDP ratio is low when compared to our contemporaries in Africa, and across most of the developed world. 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, as is projected in the ERGP, to ensure that we do not continue to overly rely on debt to fund our budget spending over the long term.
“To build a sustainable economy, we must replace the debt that we are incurring in the short to medium term, with strong revenue sources.
That is why the Ministry of Finance is focused on expanding our tax base, which we are doing with a range of initiatives which include the Voluntary Asset and Income Declaration Scheme (VAIDS) and recruitment of Community Tax Liaison Officers (CTLOS) to improve tax compliance in the long-term, and we are heavily focused on making government spending more productive and efficient.
Meanwhile, speaking at an interactive session on VAIDS awareness/Tax Thursday organised by PwC in Lagos, Adeosun said the scheme was expected to increase Nigeria’s tax to GDP ratio from current six per cent to between 10 and 15 percent, broaden the national tax base, curb tax evasion and discourage illicit financial flow.
“Most developing countries have tax to GDP ratios at 20 per cent; Nigeria still records a global low of six percent. The Federal Ministry of Finance, in a bid to address this, set up the VAIDS in collaboration with the 36 states of the federation,” she said.
She stressed that the country cannot continue to have a situation where Nigerians alone pay £360 million in the United Kingdom for school fees whereas the tax return of many of the people paying these fees have no correlation with their life style and the tax they pay.
Adeosun said that the circle of non compliance must be broken because it is a destructive circle that is not allowing Nigeria to grow, adding that tax is an obligation for every citizen and not an option.