Finance Minister: Our Public Financial System Incites Leakages

The Coordinating Minister of the Economy and Minister of Finance, Dr Ngozi Okonjo-Iweala has enumerated current challenges facing Nigeria’s economy even as she stated that public financial system in Nigeria was obsolete and gave room for leakages.

The Minister, who delivered a key paper on Restructuring Nigeria Public Finances at the ongoing National Council on Finance and Economic Development (NACOFED) yesterday in Minna, enumerated the challenges to include over dependents on oil’s revenue, lopsided public expenditure, budget formulation process and public financial management system.

On public financial management system the minister said “in many cases, we are still relying on manual and paper-based systems when it comes to budget implementation at both the Federal and also sub-national levels”.

“With all the progress of 21st century technology with today’s iPads, Android smart phones, and so on, our budget officers still have to carry files from one office to another to “process payment” and we are still using terminology from years back such as issuing warrants, raising vouchers and approving AIE! Clearly, this has to change!” she added.

According to her “these paper-based processes create room for leakages as it is difficult to obtain an audit trail. For example, some of the problems we had with our petroleum subsidy fund and the pension system were largely the result of not using proper systems”.

She explained further that, the manual processes could also lead to inefficiencies in cash management as they were instances where government end up borrowing short term funds at high interest rate from local banks when concurrently it has unutilized fund domiciled with the local commercial banks.

Okonjo-Iweala said a computerise cash management system would solve the problems but assured that the government is working to address some of the problems by first of all diversifying Nigeria’s economy, paying attention to debt management and introducing electronic system to support budget implementation.

Meanwhile the minister said that most of the budgets of governments at all levels goes to recurrent expenditure which consist only payment of salary and overhead expenses even as there are more demands coming from ASUU.

She said “at present ASUU wants government to pay N92 billion in extra allowances when the resources are not there and when we are working to integrate past increases in pensions”.

source: Leadership News

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