Amidst concerns over increases in budget size and deficits, the Federal Government has indicated that it prefers expansionary fiscal policy which entails huge budget deficits and debts as against a balanced budget.
Giving this indication in a media chat yesterday in Lagos, Minister of Budget and Economic Planning, Senator Abubakar Bagudu, said the government had considered the expansionary budgetary system as the key to driving economic development.
He explained that many other economies with the same population range as Nigeria’s were driven by similar budgetary systems.
He also noted that such economies including Brazil and Indonesia are now far ahead of Nigeria with their budgets in excess of 200 times that of Nigeria.
Justifying the further increases in the expenditure budget following the expected increase in revenue, Bagudu described Nigeria’s 2025 budget as ambitious, explaining that President Bola Tinubu wanted to challenge his team with aggressive developments in infrastructure and growth in the real sector.
Recall that despite concerns over the initially N49.7 trillion budget for 2025 considered too large, President Bola Tinubu wrote to the National Assembly requesting for an additional N4.5 trillion increase to bring the final budget size to N53.2 trillion while sustaining the deficit size at N14 trillion.
Though the President had said the increase was necessitated by expected increase in revenue, many financial experts argued that the expected increase should have been applied to funding and narrowing the deficit, instead of relying on borrowing.
However, Bagudu stated: “deploying the expected revenue increase to debt servicing is just an option available to the government but the need to expand the economy as quickly as possible is more important than paying off debt because if you expand the economy you collect more taxes and increase revenue to fund a sustained economic development.”
He added, “for a country that is under pressure for investment we need more investments to go into those areas of the economy that have been underperforming.
“Part of the crisis we are confronting now is the realization that we have been under-investing in almost every area of our national economy and services; that’s also why our police, security services do not have enough equipments and do not have enough personnel, our roads, our schools and so on”.
