The Federal Government has revealed on Tuesday, May 5,2015, through the minister of finance, Dr. Ngozi Okonjo-Iweala, that within the past four months (from January – April), it has borrowed the sum of N473bn to finance the 2015 budget.
The minister made this revelation at a media briefing on the 2015 budget that was passed last week by the National Assembly that the drop in oil revenue which began in 2014 and lasted up to the first quarter of this year, had impacted negatively on the gross federally collectible revenue.
This may be the reason why both federal and state governments have been unable to pay workers salary for many months.
She said the country experienced a 50 per cent cut in revenue owing to the slump in oil prices, coupled with low revenue receipts from non-oil sources as most companies had yet to file in their tax returns within the first quarter of this year which forced the government to cut the sum of N473bn out of the N882bn provided for borrowing in the 2015 budget. According to her the federal government had, in the past, tried to reduce the level of borrowing, but failed this year owing to cash flow problems.
For instance, she said government borrowing was brought down to about N570bn last year, noting that the figure had gone up to about N882bn so as to cushion the negative impact of revenue decline stating that about N380bn of the N882bn is for external borrowing while the balance of N502bn is for domestic borrowing.
She said, “We have tried to work within the budget. The budget provides for N882bn in borrowing and we have had to increase the borrowing budget this year as compared to last year when we have actually brought it down. If you all recall, we said we will be bringing down borrowing to finance the budget and we have been doing that steadily.
“Last year, the borrowing came down to about N570bn but this year, because of the very difficult cashflow situation, we ve provided N882bn in borrowing.
“About N380bn of that is external borrowing and the balance of N502bn for domestic borrowing. So what we have had to do to manage this first half is to front load the borrowing program which is a normal reaction that you have because the cash crunch has been very difficult.
“In the budget, we provided for N882bn and all we have borrowed is within the budget. What we have borrowed so far is N473bn and so we still have more room for borrowing.”
The Senate had last week Tuesday, April 28, passed the national budget of N4.493tn for the 2015 fiscal year, about five months after it was presented by Okonjo-Iweala. The fiscal document, which was earlier passed by the House of Representatives two weeks ago, was N51bn higher than the N4.425tn submitted to both chambers of the National Assembly by the Federal Government.