Borrowing to fund expenditure is mortgaging the future —ICAN

THE Institute of Chartered Accountants of Nigeria (ICAN) has likened the policy of borrowing to fund recurrent expenditure to spending unearned income and thus mortgaging the future by abating possible future economic development.
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ICAN president, Mr Chidi Onyeukwu Ajaegbu, who said this while addressing a press conference at the weekend, added that adopting such policy would result in the truncation of the country’s overall development.

Ajaegbu said, “It has been observed that despite low level of budget implementation, we have been operating deficit budgets in Nigeria. This will retard development because it is tantamount to spending unearned income. This negative policy should be addressed urgently as it is unsustainable.”

According to him, while it is not bad to borrow to finance budget, “Borrowing to fund recurrent expenditure is not something we should encourage. When we borrow, it should be to invest in building infrastructure; it should be to develop our country, not to pay salaries and meet day to day expenditure.”

The ICAN president, who traced poor budget implementation to avoidable delays in the passage of appropriation bills, added that “significant expenditure is committed to the preparation of annual budgets in the country only for its implementation to be observed in the breach.”

On the way out of the imbroglio, he said “It is important to enact a law which will define the nation’s budget cycle with specific timelines for each stage and sanctions for a breach of this law.”

The ICAN president, while speaking on the nation’s education system, said, “A nation’s economic development is largely dependent on the education standard of the citizens. The Nigerian educational system has over the years been crying for effective and efficient attention. “Even though the Federal Government has made efforts to address the challenges, the faint measures still appear very little. My institute is hereby calling on the government to step up its efforts at revamping the nation’s educational system. A poor educational system is likely to feed unto professional education and training with severe negative consequences.

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