NEW NAIRA NOTES
Written by Business Editor Emeka Anaeto
The Federal Government (FG) has stated that it will no longer permit the Central Bank of Nigeria (CBN) to print money through Ways and Means to pay the budget deficit in the face of revenue pressures on the 2024 national budget.The Minister of Budget and National Planning, Atiku Bagudu, revealed this information in an interview with journalists in Lagos. He added that the government will also consider issuing bonds as a means of attracting private investments.
He declared: The government will no longer get money prints from the central bank. In the event that we borrow money from the Central Bank, it will only be to the degree permitted by law.
According to the law, we are permitted to borrow up to 5% of our earnings from the prior year. We have been exceeding that 5% threshold, which is incorrect.
And we’ll issue bonds if we have to borrow money. It is a choice. Individuals are able to invest. It even gives some wealthy private investors the chance to purchase government bonds. Some people are eagerly anticipating it.
The expected deficit in the FG’s 2024 budget was N9.2 trillion, or roughly 3.9% of GDP. However, the National Assembly altered the figures in the major income lines, appropriating additional money on the grounds that oil revenue and exchange rate gains would exceed the amounts the Federal Executive Council budgeted in order to offset the ensuing increase in deficit.
Bagudu offered the following commentary on this development: “We chose democracy, and democracy has opportunity cost. Advanced democracies, especially the US, have had budget shutdowns because to the division of power among many institutions, including the legislature, executive branch, and court, especially in the area of appropriations.
On actuality, the National Assembly is the body with the last say on matters of appropriation under the current laws. Executives are free to propose ideas, as Mr. President did on November 29, 2023, but the National Assembly made the wise decision to reject our proposal because the sport exchange rate was far higher. And they believed that both our expectations for revenue from government-owned businesses should increase by that sum. They think it has more potential.
“So, we accepted what the National Assembly did, and while calling upon them, that let’s all ensure that we tax everyone by oversight, by interrogation, so that we achieve those thresholds we set for ourselves.”In response to questions about why the budget called for additional borrowing given the nation’s existing enormous debt, Bagudu stated, “Unfortunately, some things in our national life cannot wait. We are a large family. We favour them receiving an education. We face a security dilemma. We require additional ground coverage. Therefore, even though reducing your borrowing is something you would like to do, there is a minimal amount that you must do.
We therefore require an irreducible minimum level of spending, but we lack the funds to meet it. There are nations in the globe that receive revenue equal to half of their GDP. Over 30% is the case for most European nations. France makes up almost 50%. Italy, I believe, accounts about 38%. Nigeria was once the country with the lowest GDP worldwide. Therefore, you are in difficulty in some way as soon as you have an irreducible minimum obligation and no revenue.