CS Mbadi recently made a statement about overprojection of revenue, pointing out a significant issue that has led to the country accumulating unpaid bills.
Overprojection refers to when a government or business expects to make more money than it actually does.
For example, the government might forecast high tax collections or earnings from investments, but if those expectations do not materialize, it creates serious problems.
At times, governments or businesses might overproject on purpose. This could be done to present a more favorable image to the public or investors.
By showing higher expectations, it might look like things are going well, even if they are not. However, the downside of this approach is that when the expected money does not come in, it leads to financial trouble. In the case of the government, this miscalculation often results in unpaid bills.
The government owes money to contractors, suppliers, and service providers but cannot meet those financial obligations on time.
This sets off a chain reaction, where businesses waiting for payment begin to face their own financial struggles, which, in turn, slows down the economy.
Unpaid bills are not a minor issue. They have a far-reaching impact on the country’s economy. Businesses that do not get paid may be forced to halt operations or lay off employees.
In the worst-case scenario, some businesses may even go bankrupt. This affects not only the businesses but also the overall economic health of the country.
The government’s inability to pay its debts damages trust with the public and businesses. This loss of trust can make it harder for the government to get assistance or investments from both local and international partners.
Experts have suggested that the government should adopt a more cautious approach when estimating how much revenue it will collect. Instead of overestimating and hoping for the best, it would be wiser to set lower expectations.
By expecting less, the government can create a more realistic budget that is easier to manage. This approach would help avoid over-promising and under-delivering, reducing the likelihood of accumulating unpaid bills in the future.
Effective planning and better financial management are crucial in preventing such issues from recurring.Ultimately, it is essential for the government to focus on accuracy in its financial projections.
Only by doing so can it avoid the negative consequences of over projection, including the burden of unpaid bills, a slower economy, and a damaged reputation. Proper fiscal management is vital for maintaining stability and ensuring that the country remains on a steady economic path.
