By Gom Mirian
Experts in the research and development sectors have called on the incoming administration to focus on the growth-enhancing sectors in the country rather than relying solely on revenues from crude oil to develop the economy.
The call was made in Abuja at a one-day Leadership and Development Policy Dialogue Series (LDPDS)organized by the African Centre for Leadership, Strategy and Development (Centre LSD) tagged: “Nigerian Debt Profile: Issues, implications, Lessons and Solutions for the Next Administration.” on Wednesday.
Director portfolio management department of the Debt Management Office (DMO), Mr. Oladele Afolabi said there are a lot of linkages and shortfalls in the payment of taxes, especially by companies which is the reflection of the low revenue received in the country.
While urging the next administration to ensure blockage of these linkages, he tasked the government to explore untapped mineral resources in the country to generate more revenue since the revenue obtained from crude oil is incapable of developing the economy.
Speaking at the dialogue, a professor of Economics at the University of Abuja, Isa Muhammad said Nigeria spends N97 of every N100 earned or produced on debt service.
According to Muhammad, the Nigerian debt service to income ratio has drastically increased from 17% to 97% in ten years (2012-2021).
He said the increase is extremely high compared to the World Bank’s recommended limit of no more than 22.5%.
He said: “In 2022, a deficit of N6. 26 trillion is anticipated as a result of all fiscal activities.
“Debt payment is anticipated to cost N3.61 trillion, with N292.71 billion coming from sinking funds to pay off maturing bonds.
“This is an alarming instance of revenue challenge that, if not handled properly, could result in a problem with the sustainability of debt”, he said.
Professor Muhammad called on the next administration to strengthen government finances, lower the fiscal deficit over time, and adopt revenue and expenditure reform steps in the medium term.
He also called on the next administration to move away from budget deficits as income collections increase.
Earlier in his remarks, the Executive Director of the Centre LSD, Mr. Monday Osasah, said dialogue became imperative following the Federal Government (FG), the outcry that Nigeria’s debt sustainability has become threatened owing to the rise in its revenue shortfalls.
He said: “This revenue, unfortunately, is not matched by the high debt servicing burden of the country. According to the Minister of Finance, Nigeria is expected to spend 60% of its total revenue on debt servicing in 2023.
Also, the Head of the National Bureau of Statistics (NBS), Dr. Anthony Ayo urged the next administration to step down on the ‘debt-to-GDP ratio as a method of measuring debt sustainability rather than adopt the ‘revenue-to-GDP approach to achieve effective results.
Mr. Osasah said these assertions portend a grave threat to the Nigerian economy, as this depletes the resources available for other national developmental priorities.
He said the dialogue, therefore, presents an opportunity for stakeholders to have a shared understanding of the issues, implications, lessons, and solutions, as well as make recommendations for the next Administration.
