The Lagos Chamber of Commerce and Industry (LCCI) has called on the federal government to refrain from borrowing costly loans that would make Nigeria an indebted nation, saying loans borrowed should be commensurate with the repayment capacity of the country. long-term country.
Chairman, LCCI, Dr Michael Olawale-Cole, said the advice is on point and comes on the heels of the federal government’s proposed plan to borrow loans to fund the 2022 budget.
Olawale-Cole said this on the sidelines of his budget analysis session titled “Budget Analysis for Business Intelligence: What the Numbers and Policy Statements Mean for Business” in Lagos.
The LCCI boss further advised the federal government to focus its attention on other areas to raise funds to implement the budget rather than burdening the private sector with additional taxes.
In his words, “The federal government should be looking at other areas of fundraising to implement the budget and, of course, taxation is a must for everyone, but at the same time we shouldn’t putting too much pressure on the private sector in the field. to raise revenue. We call on the federal government to widen the tax net to avoid putting pressure on very docile taxpayers.
“There are also funds that can be borrowed externally at lower interest rates and even internally as opposed to accepting bonds or very expensive loans, which would put great pressure on our costs as a nation and on interest rates and long term run are making Nigeria heavily indebted These are issues we must try to avoid Although there is nothing hard to take out loans, loans should be commensurate with long-term repayment capacity and not pass the burden on to governments and future generations.
According to him, the federal government plans to spend the sum of 17.13 trillion naira in 2022, which is an increase of 18% from the sum of 13.59 trillion naira planned for 2021, saying that the size of the budget reaffirms the government’s commitment to pursue an expansionary fiscal policy to stabilize growth and deepen the diversification of the Nigerian economy.
He said the government’s overall spending plan shows that recurrent spending (excluding debt) is estimated at N6.91 trillion, which is 40% of total spending and 20% higher than the 2021 budget.
He stressed that the government needs to monitor the increase in recurrent expenditure (especially personnel), which he said is more sustainable to allow the private sector to create jobs while the government creates a thriving business environment.
He noted that the revenue and capital expenditure performance of the 2021 budget indicates the fiscal resilience of the Nigerian economy.
“This should be consolidated for better results in FY2022. A higher projection of non-oil revenue relative to oil revenue, if effectively implemented and discounted, will minimize the impact of external shocks, resulting volatility in oil, on the economy,” he added.
For his part, the Managing Director of Financial Derivatives Company Limited, Mr. Bismarck Rewane, said that deficit spending had not had the expected impact on the economy, saying that budget spending is currently not being supplemented by adequate local and foreign investments.
He stated the need to address Nigeria’s fiscal challenges by increasing injections through quality investments in productive sectors, fiscal consolidation and diversification of the revenue base.
He also declared the need to reduce leakage through accountability, transparency in public finances and the elimination of subsidies.
He said economic performance will be largely determined by the successful implementation of the 2022 budget, pointing out that the 2022 budget is a product of the federal government’s development plan.
Rewane said sectors to watch in 2022 include information and communication technology, agriculture, financial services, transport and construction, manufacturing and trade.
The Director General of the Budget Office of the Federal Republic of Nigeria, Ben Akabueze, has said that increasing the nation’s revenue base is the only way to fund the nation’s 2022 budget.
The President of the Institute of Chartered Accountants of Nigeria (ICAN), Ms. Comfort Olu Eyitayo, has said the shortfall to fund the budget is cause for concern, warning that Nigeria’s high debt profile will only drain the country’s foreign exchange reserves and worsen the exchange rate. rates.
Representing the President of the Manufacturers Association of Nigeria (MAN), Mansur Ahmed, the Director of JMG Limited, Mesioye Francis, urged the Federal Government to invest in tools and equipment that would do more with less.
He said access to finance is still a major challenge for the real sector of the national economy, while adding that the federal government’s backward integration plan is still not effective enough to discourage import. .
He, however, said provision had been made in the budget for the payment of subsidies only for 2022, adding that provision had also been made for the power sector reform program to facilitate cost-reflective pricing.