The response from the federal government over the comments of Godwin Obaseki, the Edo state governor over the printing of currency notes to augment the amount distributed to states by the federation account allocation committee (FAAC) for the month of March 2021 has led some economic analysts to point few loopholes as well as the ineptness in government expenditures.
It was reported that Godwin Obaseki had made a revelation that the government printed N60 billion to bump up the money shared at the Federation Account Allocation Committee (FAAC) meeting which he said will take the government’s total borrowings to about N16 trillion after the disbursement by the committee this April.
According to some analysts, in a note to business a.m, they opined that the claim is justified and didn’t start today as the government has allegedly used less than 50 per cent of the sum for debt servicing.
“Well, it is sad that it took a governor to voice our current fiscal challenge out before the media and the citizens started crying to high heavens. But nothing can be farther from the truth that Nigeria is currently broke. So broke that our revenue inflow can’t even defray capital expenditure let alone the bogus recurrent expenses.
“The CBN has been printing money for the Federal Government to cover up for its fiscal shortfall. For instance, if you check the budget implementation report for 2020, the total amount of Ways and Means (which is simply how much the CBN printed to lend to the FG), stood at over N2 trillion. That was roughly a quarter of the revised 2020 budget. And guess how much the FG used in servicing that amount – a whooping N913 billion,” the analyst revealed.
But, in the response of FG, Zainab Ahmed, the Minister of Finance, Budget and National Planning, reportedly denied the comments amid the rising debt profile of Nigeria which the governor said has put the country in ‘huge financial trouble.’
“The issue that was raised by the Edo State Governor for me is very, very sad, because, it is not a fact. What we distribute at FAAC is revenue that is generated and in fact distribution of revenue is public information. We publish revenue generated by FIRS, the customs and the NNPC and we distribute at FAAC. So, it is not true to say we printed money to distribute at FAAC, it is not true.
“On the issue of the borrowing, the Nigerian debt is still within sustainable limit. What we need to do as I have said several times is to improve our revenue to enhance our capacity to service not only our debt but to service the needs of running a government on day to day basis. So, our debt currently at about 23 per cent to GDP is at a very sustainable level. If you look at all the reports, you see borrowings from multilateral institutions,” the minister concluded.
But in the view of the analysts on the issue, they said, “We may argue that the CBN monetary policy exuberance is not directly linked to the spiralling prices, but we cannot wave off the fact that such an amount of money being pumped into circulation without a corresponding increase in economic activities (our growth rate is crawling currently and way below population growth) could spell dire consequences for inflation, private investment, the value of the naira and citizens’ economic livelihood.”