Mr. Wale Edun, the Minister of Finance and Coordinating Minister of the Economy, has praised the economic improvement under the leadership of Bola Tinubu. He shared his thoughts with journalists at the State House in Abuja following a Federal Executive Council (FEC) meeting presided over by President Tinubu. He shed light on the concerning indicators that had obscured the actual condition of the Economy and stated that the government had resolved the practices that previously hindered economic growth. He noted that the nation’s overall debt in US dollars dropped by 15% in the initial three months of 2024, which he viewed as a favourable trend.
Nonetheless, he highlighted that after taking into account currency exchange fluctuations and the issuance of domestic debt, the total debt in Naira terms rose by 25%. Edun emphasized the efficiency of the government’s Revenue collection methods, attributing it to technological advancements, and noted the ongoing implementation of strict expenditure management measures. He mentioned that the government had not used Ways and Means advances to finance its activities, breaking away from previous methods.
Present government inherited ₦22.7 trillion in outstanding debt.
He pointed out that the present government inherited ₦22.7 trillion in outstanding Ways and Means, currently under audit and being secured. Additionally, he clarified that despite this, the current deficit was ₦3.4 trillion, which is operating surpluses from revenue-generating agencies offset. In his statement to the council, he mentioned that he provided a verbal update, which he is now repeating. He began by discussing the figures from the first quarter of the year, spanning from the end of December to the end of March.
Despite the challenges, he emphasized a positive outlook by saying that the “glass is half full”. It signifies that progress has been made and they are on the right track. Alternatively, they could choose to adopt a pessimistic perspective and claim that the glass is half empty. He said the reason for his optimism is the significant decrease of 15% in Nigeria’s total debt stock when converted into US dollars. This reduction would undoubtedly be viewed positively by rating agencies, creditors, and Investors alike.
Fluctuation in foreign exchange rates increases the debt.
The nation thrives on revenue from the oil industry, allowing the country to earn in dollars. It is crucial that it assess its financial risk in terms of the dollar. Despite a significant increase in debt issuance of N8 trillion, taking into account domestic debt, the total debt stock has risen due to fluctuations in exchange rates. The combined external and domestic debts in naira have seen a 25 percent rise when calculated altogether. The fluctuation in foreign exchange rates is the main reason for this, and they are aware that it could change at any given time.
This is closely tied to the crucial issue of the government’s ability to manage and pay off its debts. Edun emphasized the importance of using credit wisely to generate revenue and ensure positive returns while being accountable and judicious in the process. President Bola Tinubu’s administration does not depend on Ways and Means to finance the federal government. There has never been a request to seek funding from the central bank for any payments, whether External Debt service, share capital cash calls, or any other government liabilities.
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Their main focus is to collect revenue for the government efficiently by utilizing Technology to avoid delays caused by manual processing. This has resulted in a strong revenue effort. Additionally, they are using technology to implement effective expenditure controls. In that specific situation, it is important to note that there was a historical background. The administration began with a significant legacy that had been securitized prior to his presidency. They are currently conducting an audit and thorough investigation into the figure, as it represents a liability for which they are obligated to pay interest.