The Debt Management Office (DMO) has advised the Federal Government to make efforts to balance its annual budgets and work towards surplus budgets to reduce borrowings.
Director-General of the DMO, Patience Oniha, who gave the advice in an interview with the News Agency of Nigeria (NAN) on Tuesday in Abuja, said improved revenue generation would help.
While explaining the recent outcry about the country’s increasingly rising debt stock, she said the figures were contained in the Draft Medium Term Expenditure Framework (MTEF) for 2023-2025, presented by the minister of finance.
According to her, the MTEF put actual revenue and debt service for January to April at N1.63 trillion and N1.9 trillion respectively. The debt service includes 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 the focus to revenue.
“How much revenue is Nigeria generating? Statistics show that relative to other countries, Nigeria’s revenue is low,’’ she said.
She cited the World Bank’s World Economic Outlook for 2020, which ranked Nigeria, with a Revenue to GDP Ratio of 6.3 per cent, at 194 out of 196 countries covered.
“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.
“The DMO has repeatedly emphasised the need to grow revenues significantly in order for debt to be sustainable, ‘’ she said.
The Director-General said that the DMO had continuously maintained its position on the need to raise revenue and added that removal of subsidy on Premium Motor Spirit (PMS) would also help to reduce the country’s huge debt burden.
She also called on the Federal Government to take urgent steps to optimise crude oil production, to enjoy the benefits of rising crude oil prices in the International market.
