Fed Govt vows to audit N22.7tr Ways and Means.

Fed Govt vows to audit N22.7tr Ways and Means.

The federal government has resolved to audit the N22.7 trillion Ways and Means debt hanging on its neck. Minister of Finance and Coordinating Minister for the Economy, Wale Edun made this disclosure at the ongoing Public Wealth Management Conference organized by the Ministry of Finance Incorporated (MoFI)

Edun: “There was an inherited amount, N22.7 trillion backlogs, we are auditing it, it’s like when I am ready to pay a loan at the bank I audit it I ask for an audit before agreeing on the sum to pay. But apart from that how do you close your ways and means gap, you get your revenue up, you get your expenditure down as much as possible” the finance minister said.

He noted that the Central Bank of Nigeria (CBN) has advocated for reducing and eventually eliminating the “ways and means” approach, which involves borrowing from the CBN to finance government expenses. To close the gap created by this practice, efforts are being made to increase revenue and reduce expenditure.

The administration of President Bola Ahmed Tinubu inherited the N22.7 trillion Ways and Means debt from past administrations. From 1999 to May 29, 2023, past governments had accessed the Ways and Means (overdraft from the CBN) to run the government. A substantial portion of the amount is alleged to be spent on paying civil servants’ salaries over the years.

Regarding revenue sources, Edun highlighted the importance of oil revenue and urged the Nigerian National Petroleum Corporation (NNPC) to increase oil production while cutting costs. Additionally, efforts are being made to improve revenue collection from government-owned enterprises and enhance the efficiency of tax collection through digitization and technology.

“We have used technology, digitization such that we have laid the foundation for a total revamp of federal government revenues and we expect the revenues to go up from what is due to government at the hands of other companies and enterprises will automatically now be deducted using digitization”.

Furthermore, the finance minister said there are plans to reform fiscal policies and tax systems to streamline processes, reduce taxes, and eliminate unnecessary levies and fees. This includes the introduction of an emergency intervention bill to rationalize taxes and improve revenue collection from both corporate sectors and individuals.

According to the minister, “the fiscal policy and tax reform committee is going to revolutionize and it’s going to announce very quickly through an emergency intervention bill, it’s going to rationalize taxes, take more nuisance value away from public sector, it’s going to reduce the tax value you have on a handful of items, all the levies and fees particularly the ones that are directly controlled by the federal will all be removed. On the revenue side, everything is being done to ensure that there are no leakages of revenue.”

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 that government funds are utilized effectively.

Wale Edun said: “On the expenses side we are also implementing a robust expenditure framework that removes the leakages, removes the double counting, payment to people who are not supposed to be, whether it is from duty waiver or tax incentives or even expenditure of government on contract supplies etc so that both from the revenue on the debt side, there’s a change that is being implemented and results are already coming through and that is the way that the government will now get itself weaned off the ways and means which have long since played.”