How FG is tackling growing inflation – Finance minister

By Tom Okpe

Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, has explained mechanisms put in place by the Federal Government to tackle incessant growing inflation in the country.

The Minister also said more scanners had been procured and installed at the Nigerian ports to make them more resourceful and attractive, discouraging the country from using other country’s ports.

Ahmed disclosed this on Wednesday while appearing before the House of Representatives Committee on Finance for 2022 budget performance and 2023 budget defence.

She indicated that level of borrowing was N1.26 trillion ahead of July, 2022 target.

According to her, in the 2023 budget, the government had a proposal of N6.1 trillion new borrowings, N3.5 trillion from domestic sources and N2.5 trillion from foreign sources.

When asked if there is a measure put in place to tackle the growing inflation in the country by the committee chairman, Rep James Faleke, the minister said the Russian/Ukraine conflict and the decision of some Central Banks, (CB) in the United States and Europe also, affects fiscal activities in Nigeria.

Ahmed however said that President Muhammadu Buhari has directed national food security council to brainstorm and make recommendations on way forward.

“On inflation, it’s a very serious situation where Nigeria’s inflation is now 23%. The inflation in Nigeria has a number of components, one of them is imported inflation, and occurrences in other countries also affects Nigeria.

“For example the war between Ukraine and Russia has impact on Nigeria in the sense that some of the inputs for food production are affected.

“Also the decisions taken by the central banks in USA, Europe on monetary tightening also impacted on their own level of inflation that also affects our country. But in Nigeria we also have food inflation, and because of the high cost of diesel we find this showing up in food prices, so when farmers produce their goods and have to transport them to markets, the increasing cost of transportation is impacting the food.

“What the central bank is doing is continuing to monitor inflation by money tightening and mopping up liquidity.

“On the side of government, the President has authorized the National food security council and we have held a meeting on how some support will be provided.

“The committee will be meeting again in the next couple of days to provide recommendations to Mr. President.”

On measures to make the nation’s port attractive to importers, Ahmed said government has procured large scanners to be installed at the various facilities, stating that all government independent revenue has been deployed to the Treasury Single Account (TSA).

“On the measures we are taking, the ministry of finance has provided and bought some very large scanners.

“Our assessment is that it will help to fasten the clearing process and decongest the ports. The ports authority on their own is trying to reorganize ports to attain better efficiency including control of entry and exit to the ports.

“The rail line from Lagos to Abuja is also being extended so that containers even before inspection can be taken out of the Apapa ports to some other locations for inspections. This will enable Nigeria attract its own business.

“On independent revenue and deployment of TSA, it has been deployed to all government agencies, there’s no agency of government that’s having their accounts outside the treasury. The accountant general will provide more information on that,” Ahmed said.

She gave review of the 2022 budget performance earlier, stating that N3.52 trillion was for debt service in the N17.32 budget pointing that in August, the federal government had borrowed N4.06 trillion from local sources, including the Central Bank of Nigeria, (CBN).

She further revealed that crude oil theft and subsidy deductions on Premium Motor Spirit, (PMS) by the Nigerian National Petroleum Company Limited (NNPCL) were factors responsible for poor performance of the overall budget even assuring that the government was mindful of working on the safety nets to cushion effects on the economy.

“Aggregate expenditure for 2022 is estimated at N17.32 trillion, with a pro-rata spending target of N11.55 trillion at the end of August.

“The fiscal deficit for 2022 is estimated at N7.35 trillion. The N5.33 trillion deficit as at August is N430.82 billion above the pro-rata level. The level of borrowing is N1.26 trillion ahead of July target.

“Actual spending as of August 31 was N9.56 trillion. Of this amount, N3.52 trillion was for debt service, and N2.89 trillion for Personnel costs, including Pensions. N1.78 billion was released for capital expenditure.

“Full implementation of the 2022 budget is challenged, particularly by oil revenues trailing at 27.1% performance as at August 2022.

“Crude oil production challenges and PMS subsidy deductions by NNPC constitute significant threat to the achievement of our revenue growth targets, as seen in the 2022 performance up to August.

“Revenue generation remains the major fiscal constraint of the federation. The systemic resource mobilization problem has been compounded by recent economic recessions.

“Overall fiscal risks are somewhat elevated, following weaker-than-expected domestic economic performance and structural issues in the domestic economy.

“Efforts have been mainly focused on improving tax administration and collection efficiency. These efforts are bearing fruits with non-oil taxes mostly performing above target for the period.

“The goal of fiscal interventions are to further stimulate the economy through carefully calibrated regulatory/policy measures designed to boost domestic value-addition, de-risk the enterprise environment, attract external investment and sources of funding, etc. Bold, decisive and urgent action is urgently required to address revenue underperformance.

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“However, in exercising its policy options, Government will remain mindful of the need to provide safety nets to cushion the impact of reform measures on the vulnerable segments of the population,” Ahmed said.

The budget defence session also featured the minister of state for budget and national planning, Clem Agba who gave highlights of the ministry’s performance of the 2022 budget; the acting accountant general of the federation, Silvia Okoliaboh and the Director -General of Budget Office, Ben Akabueze and other ministry’s officials were also present.