World Bank Pledges to Assist Nigeria Strengthen Fiscal Sustainability Plan 

By Ndubuisi Francis in Abuja

The World Bank Group is to assist states in Nigeria to improve, strengthen and consolidate the Fiscal Sustainability Plan (FSP). 

The FSP was introduced by the federal government in 2016 as part of measures to address the 2015-2016 fiscal crisis, which was triggered by a significant decline in revenue.

This culminated in low allocation to states and subsequently led to two financial bailouts to the states by the federal government.

The FSP is also designed to reform the Public Sector Financial Management (PSFM) system spanning the three tiers of government.

According to the Ministry of Finance, the proposed intervention by the World Bank would entail financing capacity building and providing technical support for officials in the 36 states of the federation by equipping them with the requisite knowledge and skills to effectively manage the comprehensive implementation of the components of the FSP on a sustainable basis.

The objective is to ensure that the states are put on the path that would lead them out of the situation in which they have to be bailed out or fail to meet their financial obligations for the wellbeing of the citizenry. 

The capacity building programme would also include imparting skills capable of contributing in the successful implementation of the Open Government Partnership commitments with a view to boosting the fiscal transparency and accountability component of the FSP.

The 22-point FSP was acceded to by the state governments in 2016 to implement fundamental reforms by taking measures, including instilling a regime of fiscal transparency and accountability, improving internally generated revenue (IGR), the taming of unnecessary recurrent expenditure and strengthening adherence to debt management guidelines by the states.

Meanwhile, the Minister of Finance, Mrs. Kemi Adeosun, has identified revenue mobilisation as critical to the success of Nigeria’s economic reform agenda. 

She said for the size of Nigeria’s government, the size of the economy and the size of needs, government revenue is simply just too low. 

“We see increasing revenue as the long-term strategic solution for sustainable and inclusive growth. Revenue is required in the short-term for investments and in the medium to long-term for our debt service,” the minister said while delivering the keynote address at the NSE-Bloomberg CEO Roundtable in Lagos Friday.

A statement issued by the Director (Information), Ministry of Finance, Mr. Salisu Na’Inna Dambatta quoted the minister as saying: “Our acceptance that our ambitions cannot be financed by oil revenue is an equal acceptance that there is a finite limit to how much can, and should be financed by debt. If we don’t want to borrow, we need more revenue.”

The minister noted that the problem was not that  the nation’s  debt service is too high but that revenue is too low”, adding that “the manner in which the imbalance between our debt service and revenue will be corrected, apart from rebalancing our borrowings in favour of longer tenure loans and external sources, is by finally and frontally facing the issue of revenue.”