: The first major challenge at the beginning was the fragmentation of efforts between the various ministries.
So, the main pillar of the ERGP was the creation of coercion between people and tools. As you are aware, managing people is one of the most difficult tasks managers face, especially trying to change the orientation of people and their mindsets. The implication is that when the revenue is not performing at a rate the government is planning, the government would struggle to fund all its programmes and activities. This is a significant challenge the government is living with on a daily basis.
Two, the budget has the benefit of being implemented for the first time for a full year, because its implementation began in January. PT: If you want to attach percentages to the budget sectoral implementation, what would the picture look like?: Like I said, in terms of revenue, which the government had to review by half-year, the overall performance was 72 per cent, which is higher than the past three years’ performances. Personnel emoluments, which have always been 100 per cent, are of course, same as debt service.
When the government was negotiating for the new national minimum wage, Labour was shown the performance of the economy on the expenditure and the revenue sides. The government made it clear that at the current rate governance was going, it would not be possible to pay the minimum wage they were demanding.
In fact, some states will fail to meet their obligations to their people, in terms of payment of the minimum wage to the workers. That is why the new VAT rate has to stay, despite the obvious pains. We know the slowdown the economy is temporary, while the payment of the minimum wage is permanent and constant. If there is anything, it will increase, with another upward review.
PT: After your appointment, your ministry must have set some targets to achieve in the next one year. What’s your assessment of those targets one year after?: For the Ministry of Finance, the overarching target was to increase the government’s revenue yield to 15 per cent to the GDP. Earlier, I said the journey has started.
We also had a target to change the distortions in the fiscal year. We targeted going to block the loopholes in several laws responsible for heavy revenue losses in the finance sector. We have captured it in the 2020 Finance Bill. For the government to deliver on major infrastructure required for economic development, make businesses easier and bring in investments, we need massive roll-out of major infrastructure. Nobody can do it with the government revenue, but with borrowing, because the infrastructure will help generate revenue to pay back the loans.
We will also have to amend that part of the law that the country’s borrowing should not go beyond 25 per cent. We might have to raise that to about 30 per cent or more. The government has also revised the country’s debt management strategy. It will go through stakeholders’ consultation before the usual approval processes.
We are also looking at how we can refinance obligations that reduce the payments the government has to do now to decrease the burden. Previously, it was high cost of domestic borrowing with short repayment tenor. Over time, as the debt instruments are maturing, we have been refinancing them with longer tenured instruments under the debt management strategy.
It is because of that situation that the President made a pronouncement in June last year that we must take 100 million Nigerians out of poverty over the next 10 year. How do you do that? By creating jobs. If someone is gainfully employed, that person is being pulled out of poverty.: This is because the proportions are not growing fast enough. That is why the government has to concentrate on SMEs.
PT: You have always said that with the pandemic and the impact on the global economy is going to be another slip into recession. The latest NBS report appears to suggest the economy is at the verge of that inevitable outcome.
We are hopeful that in the fourth quarter the performance will still be better. By the first quarter of 2021, the economy might grow back into the positive growth territory, if we are able to fully implement the ESP, which was based on an analogy that if the government spends N500 billion that the President approved as the initial ESP package. Instead of the negative growth projected at minus 4.4 per cent, it was going to slow down to about minus 3.5 per cent.