Why government can’t execute capital projects in the 2017 budget – Nigeria’s Finance Minister

shakirudeen taiwo

October 4, 2017 6:38 AM

The goal of spending the country out of recession seems unachievable.

Nigeria’s Finance Minister, Mrs Kemi Adeosun told the Senate that the backlogs of 2016 budget and inability to access foreign loans are major constraints to funding infrastructural projects planned for 2017.

These facts were disclosed during the meeting with the Senate’s Joint Committee on Finance and Appropriation on Tuesday, October 3, 2017.

The Senate had summon the Mrs Kemi Adeosun and her Budget and National Planning counterpart, Mr Udoma Udo Udoma, due to the poor execution of the capital component of the 2017 fiscal plan. According to statistics provided by Ministry of Finance, only 15% of the N2.177 trillion voted for capital projects in the 2017 budget have been released so far.

Mrs Kemi further stated that the federal government had to roll over projects in the 2016 budget, and also prioritize them over the current year's projects as they are near completion.

“The cost of domestic borrowing is extremely high and our interest rates are high, this compounds our debt servicing problems. How we plan to resolve this is to borrow more from the international market because we get longer tenures and lower interest rates.

“We successfully completed the Sukuk last week and we were able to raise N100 billion which is to be released this week. But repositioning of the economy is going to take some time so we need long and patient borrowing.

“So borrowing from the short-term market or the Treasury bill at 18 percent interest rate will be a disservice to our economy. It will compound the debt servicing,” she said.

The 2017 budget is hoped would push the country out the recession and sustain her on the recovery path. More so, the inability to get approval from the Senate for foreign borrowing was also said to be a factor accounting for its poor implementation.

shakirudeen taiwo