Nigeria seems to be sinking deeper in debt as the Federal Government said, yesterday, it would finance the N1.950 trillion deficits in the 2018 through borrowing from both domestic and international capital markets.
The Minister of National Planning, Senator Udoma Udo Udoma, who disclosed this at the budget breakdown presentation, in Abuja, also said the government was in a hurry to implement the N9.12 trillion 2018 budget.
Business and Maritime West Africa reported yesterday that data released by Debt Management Office revealed the increase in domestic borrowing by state governments as well as rising foreign borrowing by the federal government have pushed Nigeria’s public debt by 4.5 percent to N22.7 trillion in the first quarter of 2018. This is coming along with quantum 173 percent jump in the nation’s debt servicing cost to N724 billion during the quarter. The increase was accounted for largely by the increase in the Domestic Debts of states and the Federal Capital Territory (FCT) as well as the $2.5 billion Eurobond issued in February 2018 whose proceeds were still being deployed to redeem maturing domestic debt
On other sources of financing the budget, Udoma disclosed that the federal government had set up a committee on the divestment from oil assets, a key component of the administration’s strategy to shore up its revenue.
Asked to identify specific assets from which the federal government wanted to divest, the minister said, “There is a committee that has been set up on it. We have been waiting for the budget to be passed. Now that it has been passed, we will accelerate the work of that committee.”
On the approach to the budget, the minister said the administration’s strategy was to spend more on infrastructure, while leveraging private sector capital.
Consequently, Udoma said the key priority sectors of the budget were: infrastructure, security and human capital development.
The minister disclosed that some of the key reform initiatives of the administration included: Deployment of new technology to improve revenue collection; Upward review of tariffs and tax rates where appropriate; Stronger enforcement action against tax defaulters; Improving government owned enterprises’ revenue performance by reviewing their operational efficiency and cost-to-income ratios and generally ensuring they operate in more fiscally responsible manner.
Others, he said were: “New funding mechanism for JV operations, allowing for cost recovery in lieu of previous cash call arrangement; Additional oil-related revenue including: Royalty Recovery, New/Marginal Field Licences, Early licensing renewals.; and Review of the fiscal regime for Oil Production Sharing Contracts (PSCs.)
“Restructuring government’s equity in JV oil assets, with proceeds to be reinvested in other assets. This will improve efficiencies in the operations of the JVs and position them for better revenue performance in the future; Increase in Excise duty rates on alcohol and tobacco; Tax Administration improvement initiatives to positively affect collection efficiencies across various tax categories.