The Minister of Finance, Mrs. Kemi Adeosun, on Tuesday, explained that the Federal Government opted for a conservative borrowing plan to fund the critical sectors of the economy and to ensure that future generation is not saddled with the burden of debt payment.
The Minister, who described borrowing as inevitable in view of current realities of the nation’s economy, spoke at a town hall meeting/policy dialogue for good governance organised by the Alumni Association of the National Association of the National Institute of Policy and Strategic Studies (NIPSS), in conjunction with the Federal Ministry of Information and Culture in Abuja.
Stressing the urgent need to fund infrastructure, Adeosun said, “we have to invest in our infrastructure to allow the private sector thrive to create jobs and unlock the economy. We have to adopt a very conservative borrowing programme but we must borrow because for us to do rail, we need funds and to build other infrastructure we need funds.”
The Minister pointed out that some of the existing rail lines in Nigeria were constructed during the colonial era and would need to be massively upgraded and brought into the 21st century model. According to her, such investment will trickle down to the people through its impacts on agriculture, rail and solid minerals.
She stated: “The rail we have now was done in the colonial era. There was no significant upgrade. We need to urgently do rail for agriculture and solid minerals to be competitive, so I really don’t see any option than to borrow but we will borrow sustainably; we will borrow conservatively to make sure we don’t burden future generation.
“In the past, Nigeria had been borrowing to pay salaries but now we are borrowing to invest. When you borrow to invest, there is an expectation that there will be additional revenue that will service those borrowings.
“We will borrow as cheaply as possible and that is why we are approaching the World Bank and export credit agencies to provide concessionary loans. We are taking concessionary loans before going for commercial loans.”
Speaking about the nature of the public service inherited by the current administration, Adeosun stated: “We inherited 1.2 million public servants with a wage bill of N165 billion per month. You can’t send people away. What we can do is to build controls to make sure these people exist and are validly working to earn their wages, which is why we are carrying out continuous audit which has reduced our huge bills by N6 billion per month.
The Minister believes time has come to focus on capital funding. She said, “we had to attack the problem of recurrent expenditure. When we came in, over N165 billion went on salary. As we speak, we have reduced it to N159 billion.”