The Chairman of the Federal Inland Revenue Service (FIRS), Zacch Adedeji, has firmly defended the Federal Government’s borrowing strategy, stating that loans are a legitimate and integral component of the nation’s budgetary framework.
He made these remarks during the ‘Meet the Press’ session organised by the Presidential Media Team in Abuja, addressing questions on why the government continues to borrow despite improvements in revenue collection.
Adedeji insisted that the government’s loans are strictly within the confines approved by the National Assembly and should not be perceived as a failure of revenue generation. He clarified that President Bola Tinubu’s administration has already taken decisive steps to curb fiscal irresponsibility by halting the controversial “Ways and Means” advances from the Central Bank of Nigeria.
“If you remember, one of the decisions of Mr President is to collateralise Ways and Means. We stopped printing and the whole loan is taken as Federal Government loan. We are paying principal and interest, and that is why you have stability in the system and no pressure on the exchange rate,” Adedeji explained. This move, he argued, has brought discipline and transparency to government borrowing, contributing to economic stability.
The FIRS boss provided a simplified analogy to demystify the government’s fiscal plan, questioning the logic behind the criticism. “What is the component of a budget of a country? You have expenditure, revenue and loan in all budgets,” he stated. “If my expenditure for the year is ₦100,000 and my plan is that ₦80,000 is from revenue and I will borrow ₦20,000, and I have done ₦80,000 in revenue and borrowed ₦20,000 according to my budget, what is the problem with that?”
Adedeji emphasised that borrowing is a normal practice globally, essential for fuelling the broader economic ecosystem. He argued that credit is a fundamental aspect of modern economies, benefiting both the government and financial institutions. “Borrowing is not a problem. Banks are part of our economy. There is no country or individual in the world that survives based on its own income,” he asserted.
He further elaborated on the trickle-down effect of government borrowing, explaining that it supports the financial system and, by extension, state governments. “When government borrows from banks, we pay interest. It is from that interest banks pay salaries, from salaries they pay taxes to state governments, and from profits I collect taxes,” Adedeji said.
Addressing borrowing for specific projects, the FIRS Chairman framed it as a sustainable investment strategy. He indicated that loans used for critical infrastructure, such as roads, are justified because the economic activity and future tax revenues generated by these assets create a cycle for debt repayment.
Concluding his defence, Adedeji redirected focus to the legality and transparency of the current borrowing process, contrasting it with past practices. “So when Mr President said we have met our target or we are doing well in revenue, and they say why are we borrowing? Is borrowing not part of the budget we submitted to the National Assembly? Are we borrowing outside what is approved?” he queried, reinforcing that the government is merely executing the budget as legally approved.
Discussion about this post