The federal government has announced its decision to conduct an audit of the N22.7 trillion Ways and Means debt that it inherited. Wale Edun, the Minister of Finance and Coordinating Minister for the Economy, revealed this information during the ongoing Public Wealth Management Conference organized by the Ministry of Finance Incorporated (MoFI).
Edun explained that the audit is necessary to scrutinize the N22.7 trillion backlog, similar to the process one undergoes when preparing to repay a loan. The Ways and Means debt, a practice where the government borrows from the Central Bank of Nigeria (CBN) to finance its expenses, has been a lingering financial challenge. Efforts are being made to reduce and eventually eliminate this approach by increasing revenue and minimizing expenditures.
The Ways and Means debt was inherited from past administrations, spanning the period from 1999 to May 29, 2023. A significant portion of this debt is believed to have been used for paying civil servants’ salaries over the years.
Edun acknowledged the Central Bank of Nigeria’s advocacy for reducing and eventually eliminating the Ways and Means approach. To close the financial gap created by this practice, the government is focusing on boosting revenue, particularly from oil production. The Minister urged the Nigerian National Petroleum Corporation (NNPC) to increase oil production while cutting costs.
Technology and digitization are also being leveraged to enhance revenue collection from government-owned enterprises and improve the efficiency of tax collection. The government aims to streamline fiscal policies and tax systems, reduce taxes, and eliminate unnecessary levies and fees through an emergency intervention bill.
Edun emphasized the importance of a comprehensive approach that addresses both revenue and expenditure sides. On the expenditure side, measures are being implemented to reduce inefficiencies, eliminate duplications, and prevent leakages in government spending. This includes addressing issues such as duty waivers, tax incentives, and contract expenditures to ensure effective utilization of government funds.
The finance minister highlighted ongoing efforts to reform fiscal policies, stating that the fiscal policy and tax reform committee will announce an emergency intervention bill to rationalize taxes and improve revenue collection. The overall goal is to wean the government off the Ways and Means approach and ensure a more sustainable financial framework.
