Friday, March 29, 2024

WAIFEM kicks against N1.4trn budgeted for debt servicing

The West African Institute for Financial and Economic Management has cautioned the Federal Government over the huge amount allocated to debt servicing in the 2017 budget.

WAIFEM said that the N1.4trillion budgeted for debt servicing this year was too high to sustain the implementation of the budget.

The Director-General, WAIFEM, Prof. Akpan Ekpo, gave this warning in an interview in Lagos.

Ekpo said that it had become imperative that between 80 and 85 per cent of the fiscal components of the budget must be implemented for the country to exit the current recession.

“The availability of funds to execute the approved projects; the amount in the budget for debt servicing is very high at N1.4trillion; the debtservicing /revenue ratio is also too high to sustain the implementation of the budget,” he said.

Ekpo, who is also a professor of Economics, said government must adopt strategic measures in searching for a better mix to obtain funding for the budget.

He, however, noted that domestic resource mobilisation via taxation had its limits.

“I would only caution government not to raise revenue by increasing the tax rate for the working class. Rather, more people should be brought to the tax net by expanding the base and finding innovative ways to tax the rich and curb their conspicuous consumption habits,” he said.

The WAIFEM boss added that although the recession had begun to ease, the economy was not out of the doldrums.

“The recession engulfed the entire economy in 2016 and it affected both the demand and the supply side of the economy; under such a scenario you cannot be out of the recession within three months. In fact, the easing of the recession may not even be due to any policy or policies. The outcome of any serious policy takes time to register impact,” Ekpo said.

Evaluating the current foreign exchange policy of the Central Bank of Nigeria, he said that it seemed to be working in the short-run while the domestic currency had been appreciating.

“Let us see what will happen in the longrun, even though in the long-run we are all dead. To complement CBN’s forex policies, the structural reforms must continue unabated,” Ekpo said.

The WAIFEM DG also said that the economy could not be structurally transformed with monetary policies via exchange rate pass through alone, adding, “The special forex window for SMEs is a step in the right direction and should be sustained. Once all the parties play to the rules and regulations, SMEs and the economy would benefit.”

On the two years of President Muhammadu Buhari’s administration, he said, “I wish to suggest that in the remaining two years, the President should concentrate on building the country’s infrastructure, particularly human capital (education and health) as well as power supply.

“Change would mean the implementation of a developmental state economic blueprint anchored on a comprehensive economic plan within the context of market socialism. Otherwise, the change would remain cosmetic.”

Popular Articles