CBN Will No Longer Print Money For Budget Deficit – Budget Minister, Bagudu Declares

The Minister of Budget and National Planning, Atiku Bagudu, declared on Thursday that President Bola Ahmed Tinubu’s led government will no longer permit the Central Bank of Nigeria (CBN) to utilize Ways and Means to generate funds for the budget deficit.

Speaking during a press briefing in Lagos earlier, Bagudu said the incumbent government will instead turn to issuing bonds, a strategy that will also attract private investments.

Naija News understands that the Minister’s comment is coming amid the financial challenges faced by the 2024 national budget.

Bagudu emphasized that the CBN will cease printing money for the government.

According to him, if the government do borrow from the Central Bank, it will strictly adhere to the limits set by the law.

He further explained that according to the law, the government is allowed to borrow but not exceed 5% of the previous year’s revenue.

“Our mistake has been surpassing this 5% threshold,” Vanguard quoted the Minister saying in Lagos.

Bagudu added: “And if we are to borrow, we will issue bonds. It’s an option. People can invest. It even provides an opportunity for some private investors who have money to buy government bonds. There are those who are looking forward to it.”

Naija News understands that the Federal Government’s budget for 2024 initially estimated a deficit of N9.2 trillion, equivalent to approximately 3.9 per cent of the GDP.

However, the National Assembly has made alterations to the figures in the crucial revenue categories.

They have allocated additional funds under the assumption that oil revenue and exchange rate gains will surpass the initial budget projections set by the Federal Executive Council. This adjustment aims to compensate for the subsequent increase in the deficit.

Commenting on this development, Bagudu stated: “We chose democracy, and democracy has an opportunity cost. We have seen budget shutdowns in advanced democracies, particularly the US, because power is split and given to different institutions, including the executive, judiciary, and legislature, particularly in appropriation.

“In fact, the person who has the last say in appropriation under our laws as it is, is the National Assembly. So executives can provide their proposals, just like the President did on November 29, 2023, but the wisdom of the National Assembly was that the sports exchange rate was much higher than the proposal we submitted. And they felt it should go up by that amount, as well as even our revenue expectation from government owned enterprises. They feel it can go higher.

“So, we accepted what the National Assembly did, and while calling upon them, let’s all ensure that we tax everyone by oversight, by interrogation, so that we achieve those thresholds we set for ourselves.”

On why the budget still provided for more borrowing despite the already high national debt, Bagudu said, “Unfortunately, in our national life, some things cannot wait. We have many children. We want them to have an education. We have a security challenge. We need more foot on the ground. So as much as you would want to cut back on borrowing, there’s an irreducible minimum that you need to do.

“So we need an irreducible minimum of spending and we don’t have the money to meet that irreducible minimum. There are countries in the world that collect 50% of their GDP as revenue. Most European countries are over 30%. France is about 50%. Italy, I think, 38%. Nigeria used to be the second lowest in the world. So once you don’t have revenue and you have an irreducible minimum commitment, you are in trouble somehow.”