Dealing with Nigeria’s High Debt Service-to-Revenue Ratio
that we may be back solidly in the debt trap,” Fasua said, “It has become almost cliché that it’s revenue to debt ratio that matters, not debt to GDP.”According to him,“It seems like the minister of finance is helpless in this regard, as she is merely under severe pressure to fund the budget by any and every means.”“The economy suffers leakages which political actors are milking heavily while she is unable to move forcefully against them.”
Fasua believes, “The structure of the economy cannot be altered in any salutary manner because politicians have their dead weights on the country, times are therefore so tough for Nigerians. The minister can only tide over by borrowing, and as she said recently, borrowing to finance old borrowings.”
“I believe successive Nigerian governments have not dreamed big enough for the people, and most have not been totally honest.
How can Angola generate revenue of about $38billion yearly, and budget $44billion for 2017, while ‘a whole’ Nigeria, generates about $14billion and could only budget $22billion this year? South Africa budgeted $115billion this year for its 40million people, and generates at least $95billion in revenue. In terms of budgets and revenue, SA is at least 9 times Nigeria! So, the debate should probably be; where is Nigeria’s money?,” he also noted.
Also, the CEO, The CFG Advisory Ltd, Adetilewa Adebajo, said the issue was not new as it was raised and extensively discussed during the Article IV consultation earlier this year. “My take is that the government has properly captured the solutions to this problem within the ERGP. The key challenge now is implementation and to consolidate on the gains of the efficiency and cost cutting unit with the MOF.
We also need to move our tax to GDP ratios to levels commensurate to our economic ranking. We have talked about diversifying the revenue base and the time to act is now,” Adebajo explained.
Recalling that, the presidential enabling business environment council led by Vice President Yemi Osinbajo and Minister of Trade and Investment, Okechukwu Enelamah, set out a 60-day national action plan backed by Executive Orders, he said, “The result of the follow through with the implementation, has manifested in the improvement of Nigeria’s ranking with the World Bank ease of doing business, affirming an improving business environment. This is a positive signal to increased business confidence, Portfolio investment and FDI.”
Suggestion Adebajo posited: “We need to borrow a leaf from this success and apply it to the debt service issues. The improved coordination between the CBN, MITI and MOF should help forestall any problems with debt service. The efforts of the finance minister to refinance the national debt profile in an effort to reduce borrowing cost should also be to begin to take effect early next year, which will be reinforced by falling inflation and the CBN cutting rates.