The Federal Government has on Friday, January 31, denied plans to borrow N2 trillion pension funds for development of infrastructure.
Concise News reports that this government’s plan was earlier disclosed at the National Economic Council (NEC) meeting presided over by the Vice President, Yemi Osinbajo, on Thursday, January 24, in Abuja.
While briefing newsmen at the end of the meeting in Abuja, Kaduna State Governor, Mallam Nasir el-Rufai, stated that the decision of the Federal Government to pull N2 trillion out of the pension funds was reached by a NEC sub-committee.
But speaking at the Udo Udoma & Belo-Osagie (UUBO) second private equity summit in Lagos, Minister of Finance, Budget and National Planning, Zainab Ahmed, maintained that NEC only set up a committee to encourage pension fund managers to invest in infrastructure development.
“Its not true that government is borrowing the pension fund”, NAN quoted her as saying.
“What we agreed is to design a product that pension fund managers will fund attractive enough to invest in, that will give them free safe returns.
“Right now, the regulator, PENCOM, actually allows pension funds managers to invest up to 20 per cent of their money in infrastructure”.
Ahmed said that now, pension funds managers don’t have an opportunity to invest in Open Market Operation (OMO) anymore.
”We are actually working to design products which they can uptake and we are also considering, in addition to regulation, whether we should amend the Act to allow them do other things,” she stated.
On borrowings, Ahmed explained that government was working very hard to reduce domestic borrowing.
“In 2015, the total government stock that we had was 80 per cent domestic and 20 per cent foreign.
“But we are gradually changing that; the debt management strategy is to move the ratio to 60 per cent domestic and 40 per cent external and now it’s 35 per cent external borrowing.
“This is to give room for private sector to borrow and to reduce cost of debt servicing,” Ahmed said.
Speaking on Value Added Tax (VAT) increment, Ahmed said: “When you increase any form of tax, it leads to inflation, but its a temporary thing; after some months it will moderate,” the minister said.
In January, President Muhammadu Buhari signed the Finance Bill – which enforced the new tax regime – into law