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Oyedele Defends FG’ Borrowing Despite Revenue Gains
The Minister of Finance and Coordinating Minister of the Economy, has explained why the Federal Government continues to borrow despite exceeding its revenue targets, saying higher-than-expected revenue does not automatically eliminate the need for deficit financing.
Speaking during an interview with the (NOA), Oyedele said public borrowing remains necessary where government expenditure exceeds revenue, stressing that what matters is how the borrowed funds are utilised.
Addressing concerns over the country’s borrowing profile, the minister illustrated that surpassing a revenue target does not mean all budgetary needs have been met.
”If you have a budget to spend 10 and your revenue target is six, you need to borrow four. If you collect seven, you have exceeded your revenue target because it was six you were hoping to collect, but it doesn’t change the fact that you still need to borrow three,” he explained.
According to Oyedele, the government’s improved revenue performance only reduces the size of the borrowing requirement rather than eliminating it entirely.
He maintained that borrowing, in itself, is not a negative economic policy, provided the funds are channelled into productive investments capable of generating returns that exceed their cost.
”As a matter of fact, there is nothing wrong with borrowing, provided you apply it productively. For every one naira and every one dollar that we borrow, we must add more value than the cost of the borrowing,” he said.
The minister said the government’s fiscal strategy is focused on ensuring that borrowed funds support investments that stimulate economic growth, expand infrastructure, create jobs and strengthen the country’s long-term productive capacity.
His remarks come amid continued public scrutiny of Nigeria’s debt profile and the Federal Government’s efforts to improve revenue generation while financing budget deficits through a combination of domestic and external borrowing.
