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CHUKWU DAVID writes on the Senate’s stand on excessive borrowing by the Federal Government despite its disposition to expeditiously approve loan requests from the presidency
During the last administration under President Muhammadu Buhari, the Ninth Senate was known for approving almost everything forwarded to it. In fact, that culture earned the Assembly the title of “rubber stamp” from most political analysts and social critics.
However, many Nigerians expected that there was going to be a change in the pattern of operations by the lawmakers in terms of handling of issues brought to their attention for consideration and possible approval, when this 10th Senate came on board in June, 2023.
That expectation turned an illusion as the situation so far is not any different, since the nation’s highest law-making Chamber appears to have resolved latently to give approval to all presidential proposals without interrogations.
But despite the fact the Senate has been approving President Bola Tinubu’s requests, including those pertaining to loans, the legislative Assembly has suddenly began to express concerns over the frequent borrowing by the government, even when the country’s revenue generating agencies are claiming to have surpassed their targets.
Accordingly, the lawmakers, on Monday, raised concerns that despite the Federal Government surpassing its revenue targets, it has continued to depend heavily on borrowing.
They raised the concerns during an interactive session with the revenue-generating agencies as part of the 2025-2027 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP), organised by the Joint National Assembly Committee on Finance.
The lawmakers concerns followed presentations from key revenue-generating agencies, which reported exceeding their 2024 revenue targets, a development that left the National Assembly members wondering why the government of the day should still depend on borrowing for the sustenance of the economy.
In their presentations on the 2024 budget performance and the revenue projections for the N49.7 trillion 2025 budget, several agencies highlighted their excess revenue for the 2024 fiscal year.
It was at the meeting that the agencies told the National Assembly that the Federal Government only borrowed funds approved by the members, since the legislative institution is the only arm of government with power of approval of funds for execution of projects and other activities of government.
The agencies threw the challenge when the Senator Sani Musaled joint committee took them up on why the Federal Government was still seeking for foreign loans despite the increase in Internally Generated Revenue (IGR).
Govt justifies action
The Federal Government also, justified its plan to borrow N1.767 trillion (approximately $2 billion) to augment its expenditure in the 2025 Appropriation Bill due to be presented to the National Assembly before the end of the year.
Minister of Finance and Coordinating Minister for the Economy, Mr. Wale Edun, who addressed the issue at a meeting with the Joint Committee on Finance, Budget and National Planning on 2025- 2027 Medium Term Expenditure Frame Work (MTEF) and Fiscal Strategy Paper ( FSP), said that all over the world, including the United States, borrowing is an integral aspect of budgeting.
He said countries and corporate organisations borrow in order to fill gaps created by the shortfall in revenue and to ensure the execution of critical projects proposed in a given budget cycle.
The explanation followed observations and criticisms from a cross section of legislators on the continued resort to borrowing every budget year even after the revenue generating agencies had surpassed their targets.
Exceeding targets
At the meeting, revenue generating agencies such as the Nigeria Customs Service, Nigeria Ports Authority and the Federal Inland Revenue Service reported that they had already surpassed their targets for 2024 Budget and were optimistic they would repeat the same feat in the coming year.
First to make the submission, was the Comptroller- General of Nigeria Customs Service (NCS) Bashir Adeniyi, who said that by September 30, Customs had raked in N5.352 trillion revenue, which is above the N5.09 trillion targeted for the entire 2024 fiscal year.
Some lawmakers said they were uncomfortable with the recurring borrowing and the mounting debt burden it has imposed on Nigeria. However, Edun reminded them that the borrowings were not done unilaterally by the executive but usually receives the endorsement of the National Assembly.
“The revenue agencies have tried to meet and surpass their targets but we still need to borrow to meet the demands in the budget. These include provisions for health services, social services and social safety nets for the poor and mist vulnerable in the society.
The borrowing is also done to provide foreign exchange for production to the extent that we require it for payments and you require it for raw materials. I think that we are trying and we are committed to attracting enough foreign exchange, foreign direct investments,” he said.
Also corroborating the position of the government, the Chairman, Federal Inland Revenue Service (FIRS), Mr. Zaccheus Adedeji, told the lawmakers that the fact that revenue generating agencies were meeting and surpassing their targets in a given budget cycle does not mean there should be no more borrowing.
Apparently throwing the challenge back to the lawmakers, Adedeji said that while the executive makes provisions for borrowing, it takes the approval of the National Assembly for the borrowing to be effectual.
“Borrowing is part of what have been approved by the National Assembly for the federal government, meaning that the executive borrows based on approval of the legislature.
The fact that we meet revenue targets and even surpassed them as revenue generating agencies, does not mean that the borrowing component of an appropriation law, passed by the National Assembly should not be activated “The fact that we meet revenue targets does not mean government cannot borrow again. The budget we have has both borrowing and Internally Generated Revenue components.
The executive implements the budget as approved by the National Assbly,” Adedeji said. Senator Adamu Aliero (PDP Kebbi Central), who first asked the question said: “What is the Federal Government doing with excess revenues generated by the various agencies in view of its unending request for foreign loan approval?”
Giving similar reason, the Minister of Budget and Economic Planning, Senator Atiku Bagudu, said the federal lawmakers should not forget that the borrowing plans contained in the N35.5trillion 2024vbudget, were primarily meant to fund the deficit which is N9.7 trillion.
“Despite revenue targets surpassing by some of the revenue generating agencies, government still needs to borrow for proper funding of the budget, particularly in the area of deficit and productivity for the poorest and most vulnerable. We a long term development perspective plan agenda 2050 aiming at GDP per capital of $33,000,” he explained.
The Group Chief Executive Officer (GCEO) of Nigerian National Petroleum Company Limited (NNPCL), Mr Mele Kyari in his own presentation, said the Company exceded the N12.3trillion revenue projected for 2024 by already raking in, N13.1trillion. “For the 2025 fiscal year, N23.7 trillion is projected by NNPCL to be remitted into the federation account”, he said.
However, the Immigration Service of Nigeria, ran into troubled waters at the interactive session over highly lopsided Private Public Partnership arrangements on Passport production, which gave consultancy firm 70% of proceeds and government 30%.
The chairman of the committee, Senator Sani Musa, ordered the Immigration Service to present all the documents on the unacceptable PPP arrangement to the committee before the end of the week. “The so-called PPP arrangement must be reviewed or cancelled because Nigeria and Nigerians, are seriously being short changed,” he said.
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