Minister of Finance, Budget, and National Planning, Zainab Ahmed, has said Nigeria’s problem is that of revenue and not debt, as being insinuated in some quarters.
She stated this in an address at the Nigeria International Economic Partnership Forum in New York.
She was responding to earlier remarks by the president of the African Development Bank (AfDB), Akinwumi Adesina, who said Nigeria needs help in tackling its debt burden.
According to Adesina, financing was critical to solving Nigeria’s development challenges because the debt to GDP ratio of Africa has increased to 70 per cent and several countries are the risk of high debt distress due to unstable, unsustainable debt levels.
“Nigeria’s total debt level is N42.84tn or $103bn. External debt levels stand at N16.61tn or $40bn. Ladies and gentlemen, Nigeria needs help to tackle this debt burden,” the AfDB President added.
However, Ahmed disagreed, saying Nigeria has set a debt-to-GDP ceiling at 40 per cent, which the country is yet to exceed and added that Nigeria’s revenue generation is low right now.
“We do have a revenue problem and this revenue problem, we’re tackling using the instrument of the strategic revenue initiative, the revenue challenges we have we have been addressing in a systematic manner,” she added.
Ahmed further stated that the country has a very significant impact in revenue performance based on the issues in the oil sector, which is being addressed by the security agencies.
“There are some ineffective tax incentives that are currently in process of being review, so some that have reached maturity will not be renewed, there might be some new ones that are being introduced, but we’re trying to make sure that we’re getting value for the investments that we have provided.”
She said the Strategic Revenue Growth Initiatives (SRGI) is designed around three thematic areas: achieve sustainability, identify new and enhance existing revenue stream and achieve collision within the revenue ecosystem — alignment between our people and our truths.
The minister said the government has taken on some innovative approaches to financing infrastruction, giving an example of road infrastructure for tax rebate.
On the issue of debt, she said, “As of today, and this has been reported by two previous speakers, Nigeria’s public debt stock is $100.1 billion or N14.6 trillion, which represents 24 percent of the nominal GDP. This is below the 40 per cent threshold that we have set up for ourselves.”
The finance minister reiterated that Nigeria operates a four year rolling medium term strategy which guides the borrowing strategy of the federal government and there are specific indices that are closely monitored.
Ahmed further stated that “the portfolio composition between external and domestic is set at 30:70. So 70 percent of our debt is domestic and 30 per cent is external. We also have a mix of long to short term financing and the mix is 75 to 25 and we are very well within this threshold”.
“So the medium term strategy show that the Nigerian debt portfolio is still operating within sustainable limits.”
