The Minister of Finance, Mrs. Kemi Adeosun, has said that the Federal Government would raise about $4.5 billion from multiple external sources, including the Eurobond market, to plug its budget deficit.
The Minister speaking over the weekend at the KPMG CFO Forum held at Eko Hotel in Lagos said the aim was to overcome the country’s worst economic crisis in years through a record budget.
Nigeria, Africa’s biggest economy and top oil producer is still reeling from the fall in crude revenues, which before now accounted for the source of 95 percent of its foreign earnings, leading to the naira hitting record lows on the parallel market amid dwindling foreign exchange reserves.
According to Adeosun, “Our total borrowing expectations are now at N1.8 trillion ($9.1 billion) and we hope to raise approximately $4.5 – 5 billion from multiple external sources. This includes multilateral agencies, export credit agencies as we are also planning to tap the Eurobond market,”
She noted that the government was optimistic that it would receive the desired support after cutting government costs and improving revenue collection adding that the Muhammadu Buhari administration, intends to achieve this through four keys.
“We shall stimulate the economy to achieve a real GDP growth rate of 4.2 per cent in 2017; reduce cost of governance, extract efficiencies in the public service and enhance collection of internally generated revenue. Government would also increase infrastructure development and be able to fund the budget deficit and negate trade balance cost effectively,” she said.
According to her, the contentious issue of the exchange rate policy that will complement the fiscal policy of this administration will be a product of determining the real equilibrium exchange rate path of the naira. “The finance ministry expects that the monetary policy authorities will be in a position to determine the steps required to put the currency in equilibrium after considering a number of variables,” she added.
She noted that other prongs of government’s economic plan included greater coordination of fiscal and monetary policy, initiatives to achieve broad improvements in overall business environment, specific policy initiatives to catalyse Medium, Small Micro Enterprises (MSME) of 50 per cent GDP growth.
This the Minister said, would be actualised through tax harmonisation and incentives, inclusivity through increase in share of business awarded to MSME from government and social welfare programme to support lowest income demographics.
“In all, the target outcome is to achieve a real GDP rate of 4.2 per cent, infrastructure development to unlock economic growth, diversification the economy and growth of the non-oil sector, improvement in overall business environment and improvement in key socio-economic indicators,” she said.
She noted that there would be increased capital spending to address infrastructure deficit as government would increase expenditure on infrastructure to 30 per cent of total expenditure from the 10 per cent it was in 2015. “There would be investment of N1.8 trillion in transport, roads, housing, power and health; Selective use of private capital through PPPs with substantial increase in gross capital formation, enablement of industrialization and increased competitiveness of business coupled with acceleration of GDP growth, job and wealth creation,” she stated.