Govt Can’t Cut Expenditure, Says Akabueze

The Federal Government cannot afford to cut its expenditures in spite of the country’s rising indebtedness, but rather will focus on loan efficiency and utilisation.

Director-General, Budget Office of the Federation, Ben Akabueze, gave reasons the government would continue to grow its expenditures despite concerns over the country’s budget deficit and attendant national debts.

He spoke at the virtual annual recap and outlook session hosted by the Nigerian Exchange (NGX) in collaboration with Renaissance Capital (RenCap).

Citing government’s data on revenues and expenditures, Akabueze said Nigeria cannot afford to slow down on its expenditures given the country’s infrastructural requirements and economic development programmes.

He said government would rather continue to focus on diversifying and growing its revenues while also continuing to make efficient use of loans.

“For us, driving up government revenue is simply something we have no choice about. Cutting back on government expenditure at this point in time is not a viable option for a number of reason. Number one, it’s not like we are spending too much as government, truth be told we are spending too little. Our public expenditure to GDP ratio is towards the bottom even on the African continent, so we are not spending nearly enough in aggregate on capital basis.

“So what we need to do on the expenditure side is focused on efficiency of spending, hoping to lower the overall size of the government expenditure is not advisable,” Akabueze said.

According to him, the option for the government is to try and shore up revenues because it has lowest revenue to GDP ratio globally and as such, the real concerns about the debt currently is the debt-service –to-revenue ratio, that is what is raising question about sustainability of the debt.

“Growth is still tepid in Nigeria. The option now is to shore up revenue to GDP ratio. What we have currently is a serious revenue issue not debt sustainability issue. Our public expenditure to GDP is one of the lowest, we need to focus more on efficiency of spending to boost revenue,” Akabueze said.

He noted that the oil subsidy remains a major concern for the economy as Nigeria grapples with global crude oil price fluctuation and production.

According to him, Nigeria suffered a huge loss from oil shock in 2020 as predictions for most of the year were below projected estimates.

He attributed the shocks to reduction in oil activities occasioned by COVID-19 crisis and insecurity arising from theft of crude oil.

He pointed out that key initiatives in the Finance Act 2021 were meant to drive efficiency and improve tax collection and other government revenues by leveraging on technology.