Senate, Reps advised to legislate against budget padding

Baba Musa, director-general of the West African Institute for Financial and Economic Management (WAIFEM), has called for legislation to ensure the annual publication of tax waivers in Nigeria to prevent budget padding, debt, and poverty.

Mr Musa also called for strict adherence to existing laws to tame rising food inflation, Naira volatility, poverty and other factors affecting the growth of the nation’s GDP.

He made the call at a book launch and public lecture organised by the Centre for Economic Policy and Research (CEPAR) at the University of Lagos to mark the retirement of Ndubisi Nwokoma, the centre’s director.

Mr Musa listed factors that contribute to the nation’s economic vulnerability, including dependence on a single sector, natural disasters and climate change, debt burden, global economic trends, and exchange rate vulnerability.

He said both monetary and fiscal policies had failed to address poverty, adding that Nigerians were better and richer 10 years ago than now despite nominal GDP growth.

According to him, monetary policy did not achieve its desired objectives in the last five to seven years.

“Despite the rate hike in recent times, as at April 2024, the headline, core, and food inflation stood at 33.20 per cent, 25.9 per cent, and 40.01 per cent, respectively. Therefore, monetary policy was unable to tame inflation. The economic growth has been fragile. The recent IMF forecast of 2024 and 2025 stood at 3.3 per cent and 3.0 per cent

“Also, the fiscal policy story is not different. The primary balance deficit has been increasing over the years due to rising expenditure without a corresponding increase in revenue. Major source of finance budget deficit is domestic borrowing which mostly come from non-banking public. The banking system borrowing most comes from commercial banks,” he said.

He urged the National Assembly to enact a law to mandate the publication of all tax waivers and tax relief, including the amount and beneficiaries annually, to prevent manipulations increasing Nigeria’s debt burden.

“The National Assembly could establish a numerical debt limit policy based on debt service to revenue or debt to revenue,” he said.

Musa also called for tax policy redesign to capture the rich and large companies, while reeling out recommendations for nationally-accepted long-term development plans.

He warned against austerity measures slowing down growth in African countries, calling for fiscal and monetary policies to break away from austerity.