The chairman of the Federal Inland Revenue Service (FIRS), Zacch Adedeji, has declared that loans remain a legitimate part of Nigeria’s budgetary framework.
Adedeji, who spoke against the backdrop of the Federal Government meeting its revenue targets, but still taking loans, emphasised that borrowing should not be viewed as a failure in revenue generation, but as a typical part of a country’s fiscal plan.
He particularly asked if the government was borrowing outside what was approved by the National Assembly, saying that the loans were part of the submitted budget.
Adedeji told journalists at the Meet the Press session, that borrowing was part of the economic ecosystem globally, stressing that no individual or government survives solely on income without credit support.
The FIRS Chairman then posed a question to illustrate his point, saying; “What is the component of a budget of a country? You have expenditure, revenue and loan in all budgets. If my expenditure for the year is ₦100,000 and my plan is that ₦80,000 is from revenue and I will borrow ₦20,000, and I have done ₦80,000 in revenue and borrowed ₦20,000 according to my budget, what is the problem with that?
“Borrowing is not a problem. Banks are part of our economy. There is no country or individual in the world that survives based on its own income.
“When government borrows from banks, it pays interest. It is from that interest banks pay salaries, from salaries they pay taxes to state governments, and from profits I collect taxes,” he said.
Adedeji further said that borrowing for infrastructural projects is a sustainable economic strategy as future tax collections from those who use the facilities usually help repay the debt.
He said that the President Bola Tinubu administration has already stopped the controversial “Ways and Means” practice of printing money, adding that outstanding loans are now properly recognised as Federal Government debt.
According to Adedeji; “If you remember, one of the decisions of Mr President is to collateralise Ways and Means. We stopped printing and the whole loan is taken as Federal Government loan.
“We are paying principal and interest, and that is why you have stability in the system and no pressure on the exchange rate,” he said.
