The Debt Management Office (DMO) has charged the Federal Government to increase its revenue generation to enable it to balance its annual budgets with a view to reducing borrowings.
Director-General of DMO, Ms Patience Oniha, stated this in an interview in Abuja, insisting that improved revenue generation would help reduce borrowing.
It would be recalled that the Nigerian media was recently awash with controversy about the country’s increasingly rising debt stock and huge revenue that went into debt servicing.
The controversy was generated by the disclosure by the Minister of Finance and Economic Planning, Mrs Zainab Ahmed, who disclosed that between January and April 2022, the country generated revenue of N1.63 trillion, but expended N1.94 trillion in debt servicing.
Oniha explained that the figures were contained in the Draft Medium Term Expenditure Framework (MTEF) for 2023 to 2025 presented by the minister.
The MTEF put actual revenue and debt service from January to April at N1.63 trillion and N1.94 trillion, while the debt service of N406 billion on ways and advances.
The figures show that debt service was higher than revenue. This is by no means a desirable position but then we need to shift focus to revenue.
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“How much revenue is Nigeria generating? Statistics show that relative to other countries, Nigeria’s revenue is very low. A strong and comparable revenue base will not only reduce the need for relatively large amounts of new borrowing as Nigeria has witnessed but will also reduce the debt service to revenue ratio,” she stressed.
She stressed the need to grow revenues significantly in order to reduce debt burden, saying that the agency had continuously maintained its position on the need to raise revenue, adding that removal of subsidy on Premium Motor Sprite (PMS) would also help to reduce the country’s huge debt burden.
Oniha urged the Federal Government to take urgent steps in optimising crude oil production to reap the benefits of rising crude oil prices in the international market.
“There is a vital need to ramp up crude oil production and tackle oil theft and pipeline vandalism to meet oil revenue targets, especially in light of rising crude oil prices.
“Other structural issues such as security, inflation, infrastructures deficit and foreign exchange shortage adversely affecting the business environment need to be resolved. This will create an avenue for efficient tax collection and wider tax base” she said.
Oniha advised the Nigerian media and stakeholders to also pay attention to the challenges of revenue generation.
“It is advisable for the media and the public analysts to begin to focus attention on Nigeria’s revenue generation. Increasing revenue generation is the way to go and that is how countries will develop and use borrowing funds to augment revenue shortfalls now and again.
“Nigeria has been running budget deficits for decades and it is about time to shift to a balanced budget and even surplus budget,” she stated.