The International Monetary Fund has advised the government of Nigeria on the need for the nation to adopt more effective revenue mobilization strategies to ease financial burdens and challenges.
It stated that majority of its revenue goes to debt servicing, leaving limited funds for critical development projects.
The Division Chief of the IMF’s Fiscal Affairs Department, Davide Furceri, while speaking at the Fiscal Monitor press briefing at the ongoing IMF/World Bank Annual Meetings in Washington DC, emphasized the need for Nigeria to adopt other revenue mobilization strategies to ease the nation’s curent economic challenges.
He pointed out that, Nigeria’s debt service-to-revenue ratio stands at around 60 per cent, significantly constraining the government’s ability to invest in social and economic programmes.
He further stated that although, the debt service-to-GDP ratio of the country has declined from nearly 100 per cent to 60 per cent, he stressed that the country must further reduce the share of its revenue allocated to debt repayments by focusing on broadening its tax base.
“There is a need to grow the revenue-to-GDP ratio. For a country Like Nigeria, the Debt Service-to-Revenue is about 60 per cent. What that means is that a larger part of the revenue of the country goes into debt servicing. What we recommend for countries like Nigeria, if they can improve their revenue mobilization, they will be able to reduce the portion of the revenue that goes into debt servicing’
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“It is important to broaden the tax base in order to have more revenue and especially in Nigeria to put in place a system and mechanism that is transparent and efficient to assist the government in collecting more revenue.” He said.
The IMF official also called for the implementation of a transparent and efficient tax collection system, urging the government to improve its fiscal operations to generate more income.
The IMF’s Fiscal Monitor official Report released on Thursday highlighted projections that Nigeria’s debt-to-GDP ratio, currently at 50.7 per cent, is expected to drop to 49.6 per cent by 2025.
It shows that the country’s public debt includes overdrafts from the Central Bank of Nigeria and liabilities from the Asset Management Corporation of Nigeria.
In his statement he said : “The overdrafts and government deposits at the Central Bank of Nigeria almost cancel each other out, and the Asset Management Corporation of Nigeria debt is roughly halved’’.
Also, other projections show the debt-to-GDP ratio declining to 48.5 per cent in 2026 and 48.2 per cent in 2027, with a slight rise to 48.8 per cent in 2028 and 49.1 per cent in 2029.
The IMF explained that alongside revenue growth, the government must implement targeted social safety nets to cushion the effects of inflation and environmental challenges on regions and people in the country.
