In response to the fiscal challenges confronting the 2024 national budget, the Federal Government (FG) has affirmed its decision to cease the Central Bank of Nigeria’s (CBN) practice of printing money via Ways and Means to address the budget deficit.
Minister of Budget and National Planning, Atiku Bagudu, conveyed this development in a discussion with journalists in Lagos.
Bagudu emphasized that the government will now turn to issuing bonds, a strategy designed to attract private investments.
He stated, “The central bank is not going to print money for the government anymore. If we borrow from the Central Bank, it is going to be within what the law allows. The law permits borrowing, but not exceeding 5% of the previous year’s revenue. What we have been doing wrong is going beyond that 5% limit.”
Bagudu highlighted the alternative approach, saying, “If we are to borrow, we will issue bonds. It’s an option. People can invest. It provides an opportunity for private investors with available funds to buy government bonds. There are those who are looking forward to it.”
The 2024 budget projected a deficit of N9.2 trillion, approximately 3.9% of the GDP.
However, the National Assembly adjusted figures in key revenue lines, assuming higher oil revenue and exchange rate gains than originally budgeted by the Federal Executive Council to cover for the increased deficit.
Commenting on the budget amendments, Bagudu acknowledged the complexities of a democratic system, stating, “We chose democracy, and democracy has opportunity cost. We’ve seen budget shutdowns in advanced democracies. The National Assembly has the final say in appropriation.”
Addressing concerns about additional borrowing despite the high national debt, the Minister explained, “Unfortunately, in our national life, some things cannot wait. We have education needs for many children, security challenges requiring more resources. So, while aiming to cut back on borrowing, there’s an irreducible minimum that needs to be met.”
He concluded, “Countries worldwide collect substantial revenue percentages. Nigeria, once the second lowest, faces challenges due to insufficient revenue and unavoidable commitments.”
