The Fiscal Responsibility Commission (FRC) has urged the Federal Government to invest the ‘new borrowings’ in the 2021 budget in key infrastructure development to stimulate economic growth.
FRC Chairman, Mr. Victor Muruako, who stated this said the deficit in the budget was slightly above the three per cent threshold set by the FRA.
He, however, described the borrowing as a positive action saying that the FRA Act made provision for exception to the three per cent rule.
“Sub-section 2 of that Section 12 of the same law goes further to state that the fiscal deficit can actually exceed the three per cent ceiling of the Gross Domestic Product (GDP). If in the opinion of the president, there is a threat to national security or sovereignty of the country, you have to note that there is no law without exception to the rule.
“That Act made provision for exception to the rule; borrowing will definitely galvanise the economy,it will increase the generation of Internally Generated Revenue (IGR). What the government should do is make the borrowing for key infrastructure development which will stimulate the economy for growth,” Muruako said.
He said the situation with the 2021 budget was one where borrowing was a positive act.
“What is important in this case is to ensure that the funds that will be borrowed are properly utilised,” he said.
Muruako also reiterated that most government enterprises were in default of their obligations to the FRA 2007 and urged all heads of such organisations to endeavour to remit their operating surpluses to the government.
He said that non-remittance by agencies contributed to the delay in the release of funds for the budget.
“We are not talking about funds that are already somewhere. So the failure of some of these enterprises to pay in the operating surpluses over the years is part of the impact. The solution is simple; all hands should be on deck. All heads of government-owned agencies should know that we all owe it to our nation to do our best to ensure that we continue to remit what is due to the government.”
President Muhammadu Buhari on October 8 presented the N13.08 trillion 2021 budget to a joint session of the National Assembly for consideration.
He explained that the total aggregate revenue projected for the ‘Budget of Economic Recovery and Resilience’ was N7.86 trillion with a deficit of N5.2 trillion.
He said that of the N5.2 trillion, N4.28 trillion will be financed through borrowing; N2.14 trillion from domestic sources and the other N2.14 trillion from foreign sources.
Also, borrowings from multi-lateral and bi-lateral loan draw downs was put at N709.69 billion and privatisation proceeds put at N205.15 billion.
The president said that the country was still faced with the existential challenge of COVID-19 pandemic and its aftermath.
He added that the deficit provided a justification to exceed the threshold as provided for by Fiscal Responsibility Act (FRA) 2007.