The federal government is not considering the relief package offered by the World Bank for low-income countries in the wake of the COVID-19 pandemic in order not to worsen the nation’s crippling debt situation.
The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, gave the indication yesterday in Abuja.
In response to a question on whether Nigeria would consider the relief package in the face of dwindling revenue generation, the minister, who spoke during the public presentation of the 2021 budget proposals, said the package would not be considered, for now.
She noted that the conditions attached to the package were not favourable for the country, adding that Nigeria might opt for it if the conditions are relaxed later.
She said several loan agreements had been entered with various lenders, stating that seeking for debt relief would portray Nigeria as a country that cannot meet its debt obligations in the eyes of creditors.
She said: “For now, the answer is no; the reason being that we have assessed the offer and reviewed all the loans that we are committed with other countries that we borrowed from. We have to also first review all agreements we have with commercial lenders.
“It is not only Nigeria that was not able to access the loan because of the similar limitations that we have. The offer might trigger some inability of the borrowing countries to pay back.”
Giving an insight into the performance of the 2020 Revised Budget, she disclosed that a total of N1.2 trillion had been released for capital projects and N2.14 trillion to meet debt service obligations provided for in the Revised 2020 Budget, as at the end of September.
During the period under review, the sum of N2.18 trillion was also expended as personnel cost, including pensions.
She disclosed that as at the end of August 2020, the federal government’s revenue available for budget funding, which excludes government-owned enterprises (GOES) was N2.52 trillion, representing 71per cent target.
Of the N9.97 trillion appropriated on the expenditure side (excluding GOEs and project-tied loans), N6.25 trillion (representing 93.9 per cent of the pro-rata N6.65 trillion) was spent.
According to her, the Federal Government of Nigeria’s (FGN) share of oil revenues during the review period was N1.105 trillion (representing 164 per cent performance over and above the prorated sum in the revised 2020 budget) while non-oil tax revenues totalled N831.41 billion (77 per cent of revised target).
Companies Income Tax(CIT) and ValueAddedTax (VAT) collections stood at N447.52 billion and N117.75 billion, representing 82 per cent and 62 per cent respectively of the pro-rata revised targets for the period.
Customs collections also stood at N266.14 billion (77 per cent of revised target) while other revenues amounted to N583.82 billion, of which independent revenues accounted for N281.81billion.
Giving a breakdown of the 2021 budget proposals, she stated that the aggregate revenue available to fund the N13, 08 trillion proposed 2021 budget is projected at N7.89 trillion (35 per cent more than the 2020 Revised Budget of N5.84 trillion).
The minister also defended the N5. 196 trillion 2021 budget deficit, which is 3.64 per cent of gross domestic product (GDP) and above the three per cent threshold prescribed by the Fiscal Responsibility Act (FRA).
She said several loan agreements have been entered with various lenders, adding that asking for debt relief would portray Nigeria as a country that cannot repay its indebtedness in the eyes of creditors.
Ahmed said that although the 2021 budget deficit exceeded the three per cent threshold, the government has not breached the law, adding that there is a provision in that Act that allows the government to surpass the threshold during “unusual times.”
To promote fiscal transparency, accountability and comprehensiveness, the minister stated budgets of 60 GOEs are integrated in the FGN’s 2021 budget proposal.
In aggregate, 31 per cent of projected revenues is to come from oil-related sources while 69 per cent is to be earned from non-oil sources.
The minister noted that, overall, the size of the budget has been constrained by relatively low revenues.
To enhance independent revenue generation and collection, the government, she said, will aim to optimise the potential, operational and collection efficiency of GOEs with a view to generating significantly higher revenues required to fund the FGN budget from this source.
She added that the current sub-optimal revenue performance of most GOEs will be addressed through the effective implementation of the enhanced performance management framework On whether government is considering issuing Eurobond in 2021, she said it is an option that is on the table.