Nigeria’s Finance Minister, Wale Edun, Outlines Strategy to Reduce Reliance on Borrowing for 2024 Budget Implementation
The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, has unveiled the government’s approach to finance the 2024 budget with a reduced reliance on borrowing. After the recent signing of the budget by President Bola Tinubu, Edun emphasized the government’s optimism about revenue generation and highlighted key measures to achieve fiscal stability.
- Reduced Reliance on Borrowing:
- Wale Edun stated that the federal government aims to decrease its dependence on borrowing and increase reliance on revenue to implement the 2024 budget.
- The 2024 budget reflects a lower deficit as a percentage of GDP, down from 6.1% to 3.8%, indicating a strategic shift towards fiscal prudence.
- Revenue Generation Strategy:
- The government plans to leverage technology and digitization to enhance revenue collection from diverse sources.
- Optimism surrounds the revenue generation forecast for the year, and Edun expressed confidence in the improvements expected.
- Elimination of Ways and Means:
- Edun mentioned the elimination of Ways and Means as part of the government’s strategy to bring order to borrowing.
- Funding required will be sourced from the market rather than resorting to the printing of money by the Central Bank.
- Focus on Capital Expenditure:
- The 2024 budget emphasizes an increase in capital expenditure to around N10 trillion, surpassing recurrent expenditure of about N8.8 trillion.
- This shift indicates a commitment to driving economic growth through strategic investments.
Analysis and Outlook:
- Economic Rejuvenation:
- Wale Edun emphasized that the budget’s primary focus is on growing the economy, with capital expenditure taking precedence.
- The capital expenditure exceeding recurrent expenditure suggests a rejuvenated and growth-oriented economic direction.
- Fiscal Discipline:
- The reduction in the budget deficit and the commitment to fiscal discipline, as indicated by relying less on borrowing, align with the government’s efforts to manage debt levels prudently.
- Government Revenue Targets:
- The government’s intention to achieve an 18% tax-to-GDP ratio in the next three years underscores its commitment to boosting revenue through tax reforms.
Minister Wale Edun’s announcement reflects a strategic shift in Nigeria’s fiscal policy, aiming for a more sustainable and balanced approach to budget financing. The emphasis on technology-driven revenue generation, reduced borrowing, and increased capital expenditure aligns with the goal of economic growth and fiscal discipline. As the government navigates these strategies, careful execution and monitoring will be essential to achieving the intended economic outcomes.