Director-General, Debt Management Office (DMO), Dr. Abraham Nwankwo has assured Nigerians that naira and foreign exchange reserves will recover in the years ahead as the impact of government’s economy diversification plan begins to yield fruits.
He spoke recently at a breakfast meeting with Finance Correspondents Association of Nigeria (FICAN) in Lagos.
Dr. Nwankwo said government’s efforts at revamping the solid minerals, agriculture sector, manufacturing and expanding the taxation will soon favour the economy within the next five years.
The D-G revealed that a lot of revenues will be derived with implementation of tax reforms as the country’s low comparative tax revenue to Gross Domestic Product (GDP) ratio, which stands at about 7 per cent, against 18 per cent average in most developing countries, would improve as the country begins to gain strength in manufacturing and other economic activities.
Nwankwo said that if government collects tax from individuals and corporate bodies accurately and regularly, government can secure the needed resources to fund major development projects.
“You can see that in the manufacturing sector, some factories are operating below capacity. But with the ongoing implementation of President Muhammadu Buhari’s diversification of the economy and revitalizing the power infrastructure, the sector will pick up and create more jobs for the people,” he said.
“In the next five to seven years, solid minerals will be exported. It is possible that in the next five to seven years, the whole picture of Nigeria will be a complete turnaround because of government’s economy diversification plan. The difference between Nigeria and other countries facing similar economic challenges is that those countries do not have the same opportunities we have in Nigeria.
Nigeria is near 100 per cent idle capacity, meaning the flexibility to grow the economy is high,” he said.
“In other countries, the major source of revenue is taxation and therefore, taxation option should also be explored. Government should be able to sustain itself with taxation revenues and now, with better tax compliance, and effective sanctions for defaulters, we have a room to boost public revenue from taxation,” Nwankwo stated.
“This is the first time the budget specified that all borrowed funds will be for capital expenditure. The sharing of internal and international borrowing is almost 50/50.
We have been borrowing locally but we have to take advantage of the relatively low cost of funds externally and we do not want to borrow too much from the domestic economy so that we do not crowd-out the domestic environment,” he said.