Financial experts have advised the Federal Government to apply caution in implementing the 2017 budget on a deficit of N2.3 trillion; citing that there is need for careful analysis of the borrowing plan intended for financing the budget.
This was explained at the 2017 budget seminar held in Lagos on Saturday, organised by securities and exchange commission (SEC). The experts predicted that in order for Nigeria to attain a substantial degree of stability, government must reconcile the difference between its fiscal and monetary policies. They maintained that reasonable caution while borrowing along with careful alignment of the fiscal and monetary policies would solve all structural issues currently faced by the Nation, thereby improving economic growth.
The 2017 budget which sums to about N7.3 trillion is intended to be financed by borrowing. The guardian reports that an estimated N4.9 trillion of aggregate revenue is available for the budget funding, meaning a deficit of N2.36 trillion would be generated by borrowing. The guardian understands that the Federal Government will generate over N1.067 trillion from external sources, and N1.254 trillion from the domestic market.
According to the CEO of Quest Advisory Services Limited, Mr. Bayo Rotimi, who said deficits were incurred over the 2016 budget because revenue generation could not meet up to the estimated value.
He said; “There is need to exercise a bit of caution on borrowing. The amount is a significant sum; we should ensure that the proceeds of borrowing do not go into recurrent expenditure. We need to put structures in place. Again, there must be greater coordination between the regulators; the SEC, NAICOM, CBN and PENCOM because they hold the bulk of government papers and pool of fund. While SEC is trying to deepen the market, it must pull other regulators along for proper coordination. The PENCOM assets must go into critical sectors of the economy to drive growth.”
Mr Johnson Chukwu, CEO of Cowry Asset Management Limited added that the government should look at more privatisation options in improving the economy of the Nation, citing that the government are unable to efficiently manage assets. He also called for the government to publicly declare the assets which the money is intended to fund, its execution timeline and infrastructure projects at various locations across the country to enhance positive results.
Mr. Chukwu added; “There has to be aggression in the whole process. A robust privatisation timeline and timetable must be made public. There must be certainty in the foreign exchange. There must be a legal frame work that would involve the private sectors in infrastructure development.”
The Head, Economic Research and Policy Management Division, SEC, Dr Afolabi Olowookere, advised that the foreign exchange policy should be properly manage otherwise the budget deficit of N2.36 trillion will negatively affect the market equities and the performance and operations of companies.