Nothing Is Bad In Nigeria’s Budget Deficit, Says Tinubu

Posted by Nwa Diokpa Featured, Latest Headlines, News, News Across Nigeria, News From The State Saturday, January 14th, 2023

(AFRICAN EXAMINER) – Bola Tinubu, the presidential flag bearer of the All Progressives Congress (APC), has stated that there’s nothing bad in the country having a budget deficit.

Tinubu disclosed this on Friday at a presidential dialogue organised by the Nigerian Economic Summit Group (NESG).

The African Examiner recalls that President Muhammadu Buhari recently signed the N21.83 trillion 2023 appropriation bill into law, with a deficit of about N11.34 trillion.

This action of the government has raised concern from many as the government intends to finance the deficit mainly by new borrowings which would compound Nigeria’s public debt stock already at N44 trillion.

Tinubu, reacting to this, stated that the country’s budget deficit is “not necessarily bad”.

He said: “I do not hold to the mainstream view that all forms of inflation are best tackled by interest rate hikes and shrinking the economy. Supply-induced inflation does not lend itself to this harsh medicine, just as one does not cure a headache by plucking out one’s eye.

“I do not embrace the conventional wisdom that fiscal deficits by the national government are inherently bad. All governments, especially in this era of fiat currency, run secular budget deficits. This is an inherent part of modern governance. The most powerful and wealthiest governments run deficits, as do the poorest nations.

“A budget deficit is not necessarily bad. Look at the Japanese example with high government borrowing and low inflation. The real issue is whether deficit spending is productive or not.

“Unproductive deficit spending is a compound negative. Especially if backed by excessive borrowing of foreign currency. This is not classroom economics but it is the lesson of the real economic history of nations.”