Buhari Govt Denies Plans to Borrow N2trillion
Zainab Ahmed, Minister of Finance, Budget and National Planning, on Friday, stated that the Federal Government was not planning to borrow N2trillion pension funds for infrastructure development.
Ahmed, at the Udo Udoma & Belo-Osagie (UUBO) second private equity summit in Lagos, explained that the National Economic Council (NEC) only set up a committee to encourage pension fund managers to invest in infrastructure development.
“It's not true that government is borrowing the pension fund”, NAN quoted her as saying.
“What we agreed is to design a product that pension fund managers will fund attractive enough to invest in, that will give them free safe returns.
“Right now, the regulator, PENCOM, actually allows pension funds managers to invest up to 20 percent of their money in infrastructure”.
Ahmed said that now, pension funds managers don’t have an opportunity to invest in Open Market Operation (OMO) anymore.
”We are actually working to design products which they can uptake and we are also considering, in addition to regulation, whether we should amend the Act to allow them to do other things,” she stated.
On borrowings, Ahmed explained that the government was working very hard to reduce domestic borrowing.
“In 2015, the total government stock that we had was 80 percent domestic and 20 percent foreign.
“But we are gradually changing that; the debt management strategy is to move the ratio to 60 percent domestic and 40 percent external and now it’s 35 percent external borrowing.
“This is to give room for the private sector to borrow and to reduce the cost of debt servicing,” Ahmed said.
Speaking on Value Added Tax (VAT) increment, Ahmed, who admitted that it would contribute to inflation rise, said that it would moderate over time.
“When you increase any form of tax, it leads to inflation, but its a temporary thing; after some months it will moderate,” the minister said.
In January, President Muhammadu Buhari signed the Finance Bill – which enforced the new tax regime – into law.