… govt will not breach Ways and Means limits – Finance Minister
At the weekend, the Federal Government said it had concluded plans to get a fresh $1.5 billion loan facility from the World Bank as part of efforts to address the fiscal gap in the 2023 budget.
Wale Edun, Minister of Finance and Coordinating Minister of the Economy, said this while speaking with journalists at the ongoing 2023 Annual Meetings of the World Bank and the International Monetary Fund (IMF) in Marrakech, Morocco.
Edun, who confirmed his emergence as the chair of the Africa Group 1 Constituency and leader of all the African nations in the executives of the IMF, pointed out that Nigeria had become almost number one on people’s list when they want to look at where to invest.
There would be a coordination of monetary and fiscal policies, the minister said, and pledged that President Bola Tinubu’s administration will not breach Ways and Means limits.
“On the talks with the World Bank on $1.5 billion budget support, that is correct. The World Bank is the number one multilateral development bank helping developing countries or funding developing countries, projects and programmes, and sectors.
“It has free money through either International Development Association (IDA). It is for the poorer countries and right now I think we qualify as one of the countries that can borrow in the normal window of World Bank funding but also some concessionary IDA funding and that means that effectively the interest rate will be zero,” Edun said.
On the proposed budget financing, Edun said: “In this particular case, it has long been in the pipeline, and we are hoping that funding will come through soon.
“There is a Federal Executive Council meeting on Monday (tomorrow) that should be able to discuss this, as well as other initiatives for financing on reasonable terms. We have talked about the high costs of money – the World Bank money is the cheapest.”
For him, the country has taken bold and courageous steps to attract investments.
“Regarding the opportunity to attract investments, there have been many conversations and, in all honesty, the narrative is that with the bold courageous steps that Nigeria has taken, we are now at the forefront, almost number one on people’s list when they want to look at where to invest; that is now the narrative.
“Nigeria is definitely on the right path; we have taken the right decision for the economy to recover and for it to attract Foreign Direct Investment (FDI) and as well, I will add, domestic investment to recover full economic growth, job creation and at the same time, achieve inclusivity of women and young people,” he said.
He assured that the federal government was taking steps towards cutting down its expenditure.
“We’ve talked about tax reform, and that tax reform will include looking at expenditures on taxes, waivers, duties, and tax exemptions. So, that is very much part of the plan,” he said.
According to Edun, the newly constituted fiscal policy and tax reform committee that was recently inaugurated by the government was focused on domestic revenue mobilisation.
The committee, he said, was purely focused on, “domestic resource mobilisation and that includes, in no small part, coming up with our own plans and ideas rather than having them imposed from outside by those who know less than we do about our situation.”
Commenting on Ways and Means, a major challenge for the immediate past administration, the minister said: “Regarding Ways and Means, President Bola Ahmed Tinubu had even while campaigning as a candidate, President-elect and President has a commitment not to go beyond the statutory limits.
“One of his priorities is the rule of law – sticking to agreements, sticking to the law. And so, his commitment is to come within the limit for Ways and Means, which essentially means overdraft borrowing from the central bank.
“However, having made that commitment and given that direction of travel, I think the idea and commitment is to come within whatever is the statutory limit as soon as possible.”
Moreover, he pledged to ensure a harmonious relationship between monetary and fiscal policy, saying there was a natural coordination and relationship.