Mrs. Kemi Adeosun, Minister of Finance |
As the Federal Government plans to finance a deficit of
N2.36 trillion for the 2017 budget, financial experts have stressed the need to
exercise maximum caution on the borrowing plan, urging government to ensure
that that proceeds are not deployed into recurrent expenditure.
Experts, who gathered at 2017 Budget Seminar, organised by the Securities and Exchange Commission (SEC), in Lagos, at the weekend,
maintained that for Nigeria to witness a reasonable level of stability,
government must resolve the conflict between its fiscal and monetary policies. According
to them, greater caution in borrowing, with good synchronisation of the two
policies would result in resolution of structural deficiencies in the country
and accelerate economic growth.
The Federal Government has proposed a budget of about N7.3 trillion for 2017 with an estimated N4.94trillion of aggregate revenue available to fund the budget. The fiscal plan will result in a deficit of N2.36 trillion for 2017, expected to be financed mainly by borrowing. It is the intention of the Federal Government to source about N1.067 trillion of these deficits from external sources while N1.254 trillion will be sourced by borrowing from the domestic market.
Specifically, the Chief Executive Officer, Quest
Advisory Services Limited, Bayo Rotimi,
said the 2016 deficits were incurred because revenue expectations were not
achieved, adding that government should monitor and control its debt to revenue
position.
Rotimi said: “There is need to exercise a bit of caution on borrowing.
The amount is a significant sum; we should ensure that the proceeds of
borrowing do not go into recurrent expenditure. We need to put structures in
place.
“Again, there must be greater coordination between the
regulators; the SEC, NAICOM, CBN and PENCOM because they hold the bulk of
government papers and pool of fund. While SEC is trying to deepen the market,
it must pull other regulators along for proper coordination. The PENCOM assets
must go into critical sectors of the economy to drive growth.”
The Chief Executive Officer, Cowry Asset Management
Limited, Johnson Chukwu, urged
government to opt for privatisation to boost the economy, noting that
government lacked the capacity to manage assets. He, however, noted that better
results would be achieve, if government made public what the assets are,
execution timeline and the specific infrastructure projects in exact locations
across the country that the money would be used to finance.
Chukwu, who argued that no investor would make
investments in an economy that is shrouded in obscurity, urged government to
reverse the uncertainty in the foreign exchange market.
He said: “There has to be aggressions in the whole process. A
robust privatisation timeline and timetable must be made public. There must be
certainty in the foreign exchange. There must be a legal frame work that would
involve the private sectors in infrastructure development.”
The Managing Director of Investment One, Dr. Ore Sofekun, stressed the need to
promote ‘made in Nigeria’ goods in order to promote the SMEs and bring
stability to the economy. In his words: “We need to patronise ‘Made in Nigeria’ goods, we need to
promote SMEs. They need access to the market. Government must create
intervention fund and ensure that all the parts of the business of SMEs are
financed both equipment and working capital.”
The Head, Economic Research and Policy Management
Division, SEC, Dr. Afolabi Olowookere,
said the budget deficit of N2.36 trillion will have negative and significant
affect the market equities, noting that if the foreign exchange policy is not
well managed, it could affect companies’ operations and performance in 2017.
(Guardian)
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