AJOKE PHILIP
The federal government, yesterday, said the nation must reduce it’s debt service to revenue from 76 percent to 50 percent if it must build infrastructure.
Speaking at the public presentation of the International Monetary Fund‘s (IMF) Economic Outlook in Abuja, the Director General of the Budget Office, Ben Akabueze, said the country’s debt service ratio to revenue is 76 per cent and not 97 per cent as reportedly claimed by experts.
According to him, in the fourth quarter of 2021, 76 per cent of the revenue generated in the country was used for debt service but the 97 per cent was obtainable at the first quarter of 2021.
Speaking as a panelist at the event, Akabueze said the federal government is working hard to bring the figure down to 50 per cent but admitted that the figure is still much for the government to spend on much-needed infrastructures in the country.
“Our vision is to bring the figure down to 30 per cent that is why we are focusing more on revenue generation. However, little is said about public expenditure to GDP ratio because we are not spending too much even as what we are spending is not enough but effective.”
When asked about the government’s priority in terms of expenditure, he said debt service is the first followed by personnel expenditure.
He added that despite Nigeria running a deficit budget, the government has not cut spending because it is not viewed as the right way to rescue the country from lack of revenue generation.
“There is no alternative to growing revenue and it is an existential threat to Nigeria. We all have to pay more taxes, especially the rich because we are in a position to support the economy.
On his part, IMF’s Resident Representative to Nigeria, Ari Aisen, said despite the reduction in economic growth projection of African countries due to the effect of the Russian-Ukraine war, Nigeria would maintain its 3.4 per cent GDP growth in 2022.
Aisen said Nigeria’s GDP is healthy with the 3.1 per cent recorded in Q1, stating that the economic resilience would be led by growth in agriculture and not oil.
“There is a positive story to Nigeria’s economic growth despite all the challenges the world is facing as there is a huge potential that the GDP would improve with recovery from agriculture.
He however said with high debt servicing and inflation, shielding the most vulnerable households without undermining debt sustainability should be a great priority.