The President, Time Economics, Dr Ogho Okiti has said the Federal Government’s plan to borrow N1.67trillion from foreign institutions to fund part of the N2.36trillion deficit in the 2017 budget is not a viable option.

Okiti, who spoke at the 2017 Nigeria Economic Outlook Conference held on Thursday in Abuja, said Nigeria’s main hurdle to borrowing externally was the current poor economic performance.

According to him, institutions like the World Bank requires credible economic growth and recovery plan as prerequisites to borrowing.

“The Federal Government is projecting an external borrowing of N1.67trillion in 2017.

This means that at an exchange rate of N305 to a dollar, the government is expected to borrow $5.475 billion.

“If you look at the country’s economic condition and rating, it is very difficult to see where these almost $5.5 billion will come from.

“In 2016, the expectation was that the government would borrow $3.5 billion. But at the end of the day, it only succeeded in borrowing $600 million.

“If we succeed in getting the $1billion that the African Development Bank promised to lend us, we are still left with more than $4 billion to borrow.

“The highest I see us getting, through external borrowing, is $1.4 billion,” he said.

Okiti said consequently, the government would have no choice but to either borrow locally and crowd out private borrowers or fail to implement the capital expenditure component of the budget.

“It was worrisome that the proposed N2.2 trillion Capital Expenditure is close to the N2.36 trillion shortfall in the budget.”

He also expressed concern that if the government could not borrow enough, it was likely to cut capital expenditure to meet its already bulging recurrent obligations such as salaries, overhead, and debt service.

On revenue projections of the 2017 budget, he agreed that the crude oil revenue projection was realistic and achievable, so also some components of the non-oil revenue projections.

Okiti, however, said that the Corporate Income Tax (CIT) revenue projection of N808 billion for 2017 was unrealistic, even though it was lower than the N867 billion projected in the 2016 budget.

According to him, only N323 billion accrued to the government from CIT in 2016 and that, so far, no new tactic has been introduced to show that there will be a leap of over N400 billion in this year’s CIT.

He said also that the Value Added Tax projection of N242 billion and the Customs revenue projections of N278 billion was achievable with a higher level of tax compliance.

“The oil price assumption of $42.5 per barrel looks conservative since oil is now selling at over $50 per barrel.

“Oil production of 2.2 million barrels per day is too ambitious because we have not done 2.2 million barrels per day in recent years.

“Averagely last year, we produced 1.6 million barrels per day; thus, in 2017, we should not project more than 1.9 million barrels per day.

“The N305 projected exchange rate, I believe is sustainable especially with higher foreign exchange expected in 2017 from oil prices.

“Nigeria’s decision on the joint venture cash calls will reduce government revenue in the short term because Nigeria has to pay back the about 7billion dollars that it owes the IOCs.


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