Economic experts have cautioned the Federal Government against the use of debt and additional tax burden on businesses to fund budgetary provisions,

Rather, the Federal Government was advised to implement policies and reforms that will increase investment inflow while other existing businesses are propelled to function in an enabling environment.

This was discussed at an analytical conversation on the 2022 budget hosted by the Lagos Chamber of Commerce and Industry (LCCI) on Tuesday, with the theme ‘Budget Analysis for Business Intelligence.’

Over the years, the government has borrowed consistently to fund its budgets, which has continued to push up the cost of debt servicing. This has also caused the country’s debt profile to grow over 100 percent since 2015 to N38 trillion as of September 2021, according to data from the Debt Management Office (DMO).

Bismarck Rewane, economist/CEO, Financial Derivatives Company,  advised that rather than increasing the country’s debt profile and burdening businesses with additional taxes, the government can explore other viable options such as encouraging investment inflow for higher revenue generations, addressing the country’s fiscal challenges, among others.

“Investment is a catalyst for growth and the impact of an investment is largely dependent on its multiplier effect, and strategic investment in labour-intensive sectors will unlock idle resources, boost productivity, spur output growth and ultimately increase government revenue,” he said.

Unfortunately, the government’s deficit spending has not yielded the intended impact on the economy nor has the fiscal spending complemented with adequate domestic and foreign investment, he said.

“To address the country’s fiscal challenges, the government needs to diversify its revenue base, increase accountability and transparency in public finance to stop unnecessary overhead costs and leakages. This will ensure that the objectives of fiscal policy are achieved,” he said.

He further advised that the government helps promising sectors like agriculture, manufacturing, ICT, trade, transport, and construction to thrive through enabling and friendly policies, adding that policy and sector reforms to boost investor confidence and trigger investment flows must be implemented.

Michael Olawale-Cole, LCCI president advised that the revenue and capital expenditure performance of the 2021 budget, which indicated the fiscal resilience of the Nigerian economy, be consolidated for better outcomes in the 2022 fiscal year.

“A higher non-oil revenue projection in comparison to oil revenue if effectively implemented and actualised will minimise the impact of external shocks arising from oil volatility on the economy,”