In response to the fiscal challenges looming over the 2024 national budget, the Federal Government (FG) has unequivocally declared its refusal to permit the Central Bank of Nigeria (CBN) to print money through Ways and Means to address the budget deficit.
The Minister of Budget and National Planning, Atiku Bagudu, revealed this significant shift in policy during a conversation with journalists in Lagos.
Instead, the government is poised to explore alternative funding avenues, primarily through the issuance of bonds, with the aim of attracting private investments.
Bagudu emphasized the government’s decision, stating, “The central bank is not going to print money for the government anymore. If, to the extent that we would borrow from the Central Bank, it is going to be within what the law allows.”
He highlighted the legal framework that permits borrowing but not exceeding 5% of the previous year’s revenue. Acknowledging past deviations from this limit, Bagudu asserted the government’s commitment to adhering to the prescribed guidelines.
The minister outlined the new approach, indicating that if borrowing is necessary, the government will opt for the issuance of bonds.
This strategy not only aligns with legal constraints but also presents an opportunity for private investors to participate in supporting government initiatives.
Bagudu remarked, “It even provides an opportunity for some private investors who have money to buy government bonds. There are those who are looking forward to it.”
The backdrop of the 2024 budget, with a projected deficit of N9.2 trillion, approximately 3.9% of the GDP, further complicates the financial landscape.
Changes made by the National Assembly to key revenue lines, under the assumption of higher oil revenue and exchange rate gains, have added to the fiscal intricacies.
Bagudu acknowledged the complexities of democratic governance, citing the National Assembly’s role in appropriation decisions that impact budget allocations.
Commenting on the budget adjustments made by the National Assembly, Bagudu reflected on the democratic process, acknowledging the opportunity costs associated with it.
He emphasized the need for oversight and interrogation to ensure that fiscal thresholds are met. Despite the challenges, Bagudu highlighted the government’s acceptance of the National Assembly’s decisions and called for collaborative efforts to achieve fiscal objectives.
Addressing concerns about continued borrowing despite the existing high national debt, Bagudu underscored the unavoidable nature of certain expenditures.
He pointed to critical needs such as education and security challenges that demand immediate attention. While acknowledging the desire to reduce borrowing, he stressed the irreducible minimum spending required to address pressing national priorities.
In assessing Nigeria’s revenue collection in a global context, Bagudu highlighted the country’s historical position as one of the lowest revenue collectors in the world. He cited examples of European countries collecting significantly higher percentages of their GDP as revenue and emphasized the inherent challenges faced by Nigeria in meeting its financial commitments.
As the government navigates the intricate web of fiscal management, the decision to refrain from CBN money printing marks a significant policy shift.
The focus on legal compliance, bond issuance, and private sector participation reflects a strategic pivot aimed at addressing the fiscal realities while fostering transparency and accountability in financial governance.
