Federal Inland Revenue Service (FIRS) chairman, Zacch Adedeji, has explained the Federal Government’s continued borrowing, saying that borrowing is an acceptable and necessary component of Nigeria’s budgetary framework even when revenue targets are achieved.
Speaking at the Meet the Press session organised by the Presidential Media Team in Abuja, Adedeji explained that President Bola Tinubu’s administration had already ended the controversial “Ways and Means” deficit financing practice, and all outstanding amounts were now officially recognised as Federal Government debt.
“If you remember, part of the decisions of Mr President is to collateralise Ways and Means. We stopped printing and take the whole loan as Federal Government loan. We service principal and interest, and that is why you have stability in the system and there is no pressure on the exchange rate,” he said.
Adedeji argued that borrowing could not be linked to poor revenue generation but as an intentional element of fiscal policy.
“What makes up a component of a nation’s budget? You have revenue, expenditure, and loan in any budget. If my expenditure for the year is ₦100,000 and my plan is that ₦80,000 is from revenue and I will borrow ₦20,000, and I have raised ₦80,000 in revenue and borrowed ₦20,000 according to my budget, what is wrong with that?” he asked.
He emphasized that borrowing is a part of economic life everywhere, and nobody, not even businesses or governments, live on income only without credit.
Borrowing is not a problem. Banks are part of our economy. There is no country or individual in the world that survives on its own income. When government borrows from banks, we pay interest. It is from interest banks pay salaries, from salaries they pay taxes to state governments, and from profit I get taxes,” he explained.
According to the FIRS boss, taking loans to fund infrastructure development such as roads is sustainable because the debt is ultimately serviced by future tax revenues from economic activities along the routes.
“So when Mr President says we have met our target or we are doing well in revenue, and they are asking why are we borrowing? Is borrowing not part of the budget we take to the National Assembly? Are we borrowing outside what is approved?” Adedeji queried.
