- Budget: Raise N2.35tn Deficit Externally
The Abuja Chamber of Commerce and Industry has called on the Federal Government to avoid raising money from the domestic financial market to fund the fiscal deficit of N2.35tn contained in the 2017 budget.
The President, ACCI, Mr. Tony Ejinkeonye, who stated this in Abuja, said that borrowing such a huge amount from the domestic financial market would crowd out the private sector from accessing funds for investment purposes.
He said rather than borrowing from the domestic market, the government should approach foreign financial institutions to source the deficit.
According to him, since the interest rates on foreign loans are lower than what is obtainable in the domestic market, such loans will make more impact for developmental projects than locally-sourced funds.
Ejinkeonye stated, “The estimated aggregate revenue for 2017 is N4.94tn, which implies a deficit of N2.35tn. We know that external sources of deficit financing, non-banking public source of deficit financing and exchange rate have significant and positive implications on economic stability, while ways and means of deficit financing, banking system source of deficit financing and interest rate have negative implications on economic stability in Nigeria.
“Therefore, we, recommend that the deficit financing should be externally sourced and focused on the productive sectors of the economy.”
The Minister of Budget and National Planning, Udo Udoma, had said that the spending focus for next year would be on critical economic sectors that had quick transformative potential such as infrastructure, agriculture, manufacturing, solid minerals, services and social development.
For instance, he said, a total of N1.047tn would be dedicated to key infrastructural spending in 2017.