Adopt Equity Financing In Funding Budget Deficit, LCCI Urges F.G

The Federal Government has been urged by the Lagos Chamber of Commerce and Industry (LCCI) to adopt equity financing to fund the 2023 budget deficit of more than N10 trillion.

This, it said in Lagos on Sunday, would address the burden of interest payments that accompanies debt financing.

Dr Chinyere Almona, Director-General, LCCI, gave the advice while reacting to the 2023 budget of N20.5 trillion presented by President Muhammadu Buhari on Friday.

The budget, as presented by President Buhari as a deficit of N10 trillion.

According to Almona, Nigeria’s approach should not be to continue to expand its debt portfolio, especially with the increasingly unbearable burden of interest payments.

Apart from the debts, interest payments alone exposed Nigeria to fiscal vulnerably, she argued.

She stated that massive equity financing is the choice open to government to adopt to fund budget deficits.

Government plans to take N8.8 trillion in new commercial loans and use N1.77 trillion drawdown on bilateral and multilateral loans to finance the deficit.

“We are of the view that while nothing is wrong with the N10.78 trillion deficits, everything is wrong with the plan to take new loans of N10.57 trillion to finance it.

“The current administration should be encouraged to take advantage of the equity choice to bequeath a legacy that the incoming administration can build upon as Nigeria finds its way back to the path of fiscal sustainability.

“If government embraces equity financing, Nigeria will not have to make huge interest payments, and she can use some of the proceeds of the equity issuance to pay some debt.

“It can also use the proceeds from equity to make the fiscal situation more sustainable and rekindle much-needed confidence in the country’s economic and fiscal resilience.

“It is not too late to use equity to fund the 2023 deficit proposal,’’ she stressed.