The Debt Management Office (DMO), says diversification of Nigeria’s economy and its sources of revenue will reduce reliance on borrowings to fund budget deficits.
The Director-General of DMO, Patience Oniha, said in Abuja on Friday that over the years, the country had depended on foreign and local loans to augment annual budgets due to deficits.
She said that the Federal Government was faced with the challenge of increasing its revenue base to ease the debt burden.
According to her, the major reason for the increase in borrowings is because, over the years, we have had consecutive budget deficits.
“The Debt-to-Revenue Ratio as at 2021 was 71 per cent. It is high because we have been borrowing for a long time. Debt is not a grant, there is interest.
“ If we spend that much of our revenue to service debt, it means there will be very little resources to finance other activities of government.
“Each year the debt stock will keep growing. If you go back to 2010, it is the same thing, we have been running budget deficits, we have not had surplus.
“We also have infrastructure deficit which we need to fix in order to create jobs and attract the private sector so that the country’s Gross Domestic Product (GDP) can grow,’’ she said.
Oniha, however, said that the government was making efforts to grow its revenue base so as to reduce the dependence on borrowings.
“One thing we must know is that we have a low revenue base, which is worsened by the fact that most of our revenue comes from crude oil.
“That is why we sometimes say that Nigeria has a revenue problem, not a debt problem.
“Even if government needs to borrow on the short term, we need to grow revenue, and we need to encourage the private sector to finance projects.
“That is why the Federal Government initiated the Strategic Revenue Growth Initiative and the Finance Act.
“The target is to grow Revenue-to-GDP to 15 per cent by 2025.
“Steps like increase in Value Added Tax (VAT), taxing electronic bank transactions, and curbing spending by revenue generating agencies among others are geared toward increasing revenue,’’ she said.
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