In a significant development, Wale Edun, Nigeria’s Minister of Finance, has announced that the federal government is steering clear of using Ways and Means to fund external debt service and other financial liabilities.
This statement was made during a briefing with state house correspondents after the Federal Executive Council (FEC) meeting, chaired by President Bola Tinubu.
Edun assured that the government has not approached the Central Bank of Nigeria for funding to meet any financial obligations, including external debt service and share capital cash calls. “At no time have we gone to Mr. President and requested permission to seek funding from Central Bank to pay anybody, be it external debt service, be it share capital cash calls, or any other liabilities,” Edun stated. This move underscores the administration’s commitment to robust revenue collection and strict expenditure controls.
A notable point in Edun’s briefing was the inherited debt of N22.7 trillion in outstanding Ways and Means, securitised just before the Tinubu administration took office. Edun highlighted that this legacy debt is under thorough scrutiny through a forensic audit to ensure precise liability assessment and interest payments.
One of the key achievements highlighted by Edun was the 15% reduction in Nigeria’s total debt stock in dollar terms. “The debt stock of Nigeria in US dollar terms fell by 15 percent. That is very positive, any rating agency, creditor, or investor looking at that will see it as a positive move,” he noted. This reduction is viewed favorably by rating agencies and investors, indicating effective debt management and financial stability.
Despite a N8 trillion increase in actual debt issuance, the total debt stock in naira terms has risen by 25%, primarily due to exchange rate fluctuations. Edun explained that while the dollar-denominated debt has decreased, the naira-denominated debt has increased due to these currency movements, painting a complex financial picture.
The government is conducting a forensic audit to scrutinize the legacy debt figure and ensure accurate financial management. Edun revealed that the current Ways and Means deficit is N3.4 trillion, and emphasized the importance of collecting operating surpluses from revenue-generating agencies in accordance with legal guidelines.
Edun expressed confidence in the revamped financial strategies, stating that salaries, external debt servicing, and other obligations are not dependent on Ways and Means.
He asserted that Nigeria’s finances have improved significantly. “We collect the operating surpluses of revenue-generating agencies by law under the Fiscal Responsibility Act and other legal guidelines. When we look at how much is outstanding and how much is owed, we are actually positive,” Edun remarked.
The Tinubu administration’s focus on maintaining financial discipline, enhancing revenue collection, and managing debt effectively is evident from these developments.
By reducing reliance on Central Bank funding and implementing technology-driven revenue collection and expenditure controls, the government aims to create a stable and resilient financial environment.
