The Nigerian federal and state governments need to cut back spending to deal with a drop in revenues instead of depending on the central bank for financing, Finance Minister Zainab Ahmed said on Monday.
Ahmed denied claims by a state governor that the central bank printed money to make up a 50 Billion Naira ($122 Million) shortfall on federal revenues earmarked for the 36 federal states in March. “We will make sure that we don’t have to do that,” Ahmed said in an interview with the National Television Authority. “As a nation, the federal, state and local governments must review expenditure patterns. We are spending too much and we are not generating enough.”
Nigeria emerged from its second recession in four years in the fourth quarter, but revenues remained subdued as a fall in crude prices curbed the main source of income for Africa’s top oil producer. Ahmed said the government aims to triple its revenue ratio to 15% of gross domestic product.
After revenue collapsed during the last oil shock of 2015, Nigeria turned to the central bank, borrowing about a third of its debt from the Abuja-based lender to cover a budget deficit that tripled during that time. Ahmed has said the government will limit deficit monetisation and convert those loans into long-term notes.
The government has set up a presidential committee, which Ahmed co-chairs, to streamline public salaries, mostly those at state-run enterprises, she said. She said the committee has no set deadline but is working to come up with measures to rein in public wages, which account for nearly a third of federal government expenditures.
It will be difficult for states to increase domestic revenues when economic growth remains slow, although the government remains confident it can reach its projection for an expansion of 3% this year, Ahmed said. She said the government will maintain its decision to get rid of fuel subsidies but is in talks with unions about measures to mitigate higher costs on the most vulnerable.