Dr Ngozi Okonjo-Iweala
The Coordinating Minister for the Economy and Minister of Finance, and, Dr Ngozi Okonjo-Iweala, has said the Federal Government slow the growth in the debt stock, aside the proposed sinking fund of N100 billion for repaying government’s maturing domestic debts in 2013.
The minister gave this insight in a speech as Guest Speaker titled ‘Nigeria’s Financial Prospects and Opportunities in 2013’, at the Lagos Business School 17th Alumni Day conference.
She said the federal government was concerned about rising domestic debt, adding, ‘Right from my time as Managing Director of the World Bank I had expressed concerns about the rising domestic debt profile and pointed out the need for a robust strategy to deal with this issue.
“The DMO (Debt Management Office) can no longer be used like an ATM to float bonds for cash whenever resources are needed instead of continuously rolling over debt”, she said further.
According to the minister, “We are also reducing the flow of domestic borrowing from N852 billion in 2011 to N744 billion in 2012, and then to N727 billion in the proposed 2013 budget”.
Also, she said government was making good progress with reducing recurrent expenditure to sustainable levels, while increasing fiscal space for supporting capital projects.
“The recurrent expenditures will be trimmed further from 71.5 per cent in 2012, to about 68.7 per cent of the proposed 2013 budget, while capital vote is expected to increase to 31.3 per cent from 28.5 per cent in 2012. Our fiscal outlook has improved considerably, from a deficit of nearly 4 percent of GDP in 2003 to about 2.85 per cent in 2012 – below the 3 per cent threshold prescribed under the Fiscal Responsibility Act of 2007.
“As we continue to consolidate, government expenditure is expected to grow by less than 1 per cent in 2013 to N4.87 trillion, compared to the 8.8 per cent growth in 2012. We also expect the fiscal deficit to fall to 2.17 per cent in the 2013 budget”, the minister said further.
Okonjo-Iweala said, “Through the oil-price based fiscal rule we put in place in 2006, Nigeria’s public expenditures are delinked from oil revenue earnings, but more importantly, we have also been able to build up buffers against fiscal shocks in the process, bringing some stability”.
She added, “The excess crude account balance which had dropped below $2 billion at the end of 2010, was at $4.2 billion in August 2011 when I came back as Finance Minister, has increased to about $9 billion today, and our foreign reserves now stand at over $42.73 billion – the highest it has been in over 2 years. We have also commenced the operation of the NSIA – our own sovereign wealth fund, with a seed capital of $1 billion and plan to grow this in size with Federal Government contributions and other voluntary contributions from interested states”.
She said revenue generated from taxation has increased more than ten- fold since 2002 on the back of greater efficiency in tax collection. “About N4.62 trillion or 12.3 per cent of GDP was collected by the FIRS last year - compare this to a mere N434 billion or 5.6 per cent of GDP in 2002. This year, about N4.26 trillion was collected between January and October – an increase of about 13 per cent over the amount collected over the same period last year”.
The minister said, “Our non-oil revenue is projected to grow further in 2013 as the on-going reforms in our revenue collecting agencies and the implementation of initiatives to further develop the non-oil sector continue to yield results. In fact we are proposing a major tax collection drive to further increase revenue starting early next year. We have large corporate taxpayers who owe us N170 billion and have not paid because they refused. Another 1.6 million registered businesses are not paying taxes”.