Abuja, May 26, 2023 (NAN) The International Monetary Fund (IMF) has urged the incoming government of President-elect, Sen. Bola Tinubu to take steps to increase the country’s revenue base.
Ari Aisen, Resident Representative, IMF Nigeria Office, who said this during a virtual forum on the Nigerian debt situation, also advised the incoming government to drastically reduce dependence on debt to fund expenditure.
According to Aisen, to resolve the debt issues of Nigeria you need to concentrate on revenue and expenditure.
He said that the debt situation had deteriorated because the Federal Government was spending more than it was actually getting in revenues.
“How do you reduce the spending needs of the government? That should be the question.
“It is really about fiscal discipline. People should not permanently spend beyond what they generate in revenue because it becomes unsustainable.
“Eventually some people will come and ask for their money back; and some will refuse to give further loans,”he said.
Aisen said that the critical thing to do was for countries to be able to rely more on their own revenue to finance their own expenditure.
“That is the autonomy and the Independence that we like to see our member-countries rely on,” he said.
Also speaking, Vahyala Kwaga, a Senior Research and Policy Analyst at BudgIT, a Nigerian company that provides social advocacy using technology, urged the incoming government to address the distortion between fiscal and monetary authorities.
According to Kwaga, there is a lot of money being pumped into the economy and this has its impact.
“The Ways and Means is another lump sum of money that affected the economy significantly in the sense that it compounded the problem of inflation.
“A lot of these monies, according to the president, were used for infrastructure projects. Some were also given to the state governors as bailouts,” he said.
He urged Nigerians to also beam their searchlights on the state governors and their fiscal behaviours.
“The federal system that Nigeria operates allows the centre to provide monies for the states. The question is, how prudent are these monies expended when they are given to the states?
“The transparency and accountability problem we have in the use of funds is extremely problematic at the level osprey states,” he said.
He tasked the legislature to rise up to its responsibility by curbing abuse of process by the executive as witnessed in the Ways and Means Advances.
According to Kolawole Oluwadare, Deputy Director, Socio – Economic Rights And Accountability Project (SERAP), an NGO, the issues are less about whether the borrowings are lawful or not.
“It is more about the use of the loans. Both the issues of borrowing and the use of the loans are related.
“That is why the Fiscal Responsibility Act has provided clearly that borrowings by the government should be strictly for capital projects.
“The Act also provides that the government should undertake a cost-benefit analysis among other requirements before any borrowing is done ” , he said.
Monday Usiade, Director, Market Development Department at the Debt Management Office (DMO), said that the office had responsibility to manage Nigeria’s debt.
According to Usiade, the DMO receives approval from the authorities based on the difference between revenue position and expenditure, and the actual amount to be borrowed.
“We are at the service of the country, and our job is to look at the best ways, options, sources and all that we can put together to fund the government as approved by the authorities,” he said.
He added that the DMO was transparent in carrying out its functions.
He urged the incoming government to be more concerned about how to narrow the gap between expenditure and revenue so as to limit borrowings.
Meanwhile, economic experts at a recent American Business Council (ABC) Economic Update charged the incoming administration to embrace strategies aimed at tackling Nigeria’s debt overhang for economic growth and development.
Dr Yemi Kale, Chief Economist, KPMG, said that focus should be on the Consumption, Investment, Government Expenditure, Exports and Imports (CIGXM) economic indices to fully harness the potential of the country’s economy.
Kale said under the CIGXM, Nigeria must begin to boost consumer purchasing power, enhance ease of doing business, provide the right infrastructure, increase public investment and enact fund usage transparency.
He added that the country must increase export tentacles, enhance competitiveness, promote income substitution and address large debt burden and debt servicing ratio to ensure long term economic sustainability.
“Since 2013, Nigeria’s public debt has increased by almost seven folds and inflation and high debt servicing costs are factors that have raised debt levels.
“Although debt to the Gross Domestic Product (GDP) remains relatively low at less than 40 per cent, arbitrary borrowing from the Central Bank of Nigeria to cover budget deficit has undermined fiscal prudence.
“The income administration must curtail excessive borrowing by raising revenues from both oil and non-oil sources and engage in prudent budget practices,” he said.
He urged the incoming government to implement fiscal restraint, enhance revenue production through taxation changes, diversify the economy, and successfully control governmental expenditure to lower the debt load and foster economic growth.
Also, Mrs Mokutima Ajileye, the Managing Director, P&G Nigeria said the country’s manufacturing sector needed the certainty and predictability that came with stable and long-term government policies to increase the sector’s contribution to the GDP.
According to her, the sector is frustrated by the fact that policies keep changing, timelines for some policies are unrealistic and the foreign exchange rate is uncertain.
“The manufacturing sector needs to be able to plan business on certainties and it is important to bring industry players into the room when making policies,” she said.
NAN reports that Nigeria’s total public debt stock as at Dec.31, 2022 stands at N46.25 trillion (103.11 billion dollars).
This is according to a statement issued by the Debt Management Office, DMO, in Abuja.
The DMO said the total public debt stock of the country consisted of the domestic and external debts of the federal government and the sub-national governments.
The sub-national are the 36 state governments and the Federal Capital Territory, FCT.
The comparative debt stock for Dec. 31, 2021 is N39.59 trillion (95.77 billion dollars)
The DMO said in terms of composition, total domestic debt stock stood at N27.55 trillion (61.42 billion dollars), while total external debt stock was N18.70 trillion (41.69 billion dollar).
“Among the reasons for the increase in total public debt stock were new borrowings by the Federal Government and sub-national governments, primarily to finance budget deficits and execute projects.
“The issuance of promissory notes by the federal government to settle some liabilities also contributed to growth in the debt stock,’’the DMO said.