The Debt Management Office (DMO) has revealed that the reason for Nigeria’s rising government debt levels is due to increasing budget deficits over the years.
This was disclosed by the Director-General of DMO, Patience Oniha in an interview with the News Agency of Nigeria (NAN) in Abuja on Friday.
She revealed that economic diversification and productivity will enable the FG to reduce its reliance on borrowing to fund its budgetary obligations.
What the DMO boss is saying
The DMO Chief revealed that FG has been facing issues of increasing its revenue base to ease its debt burden, citing that increasing budget deficits are the reasons for the continued borrowings.
“The Debt-to-Revenue Ratio as at 2021 was 71 per cent. It is high because we have been borrowing for a long time. Debt is not a grant, there is interest.
“ If we spend that much of our revenue to service debt, it means there will be very little resources to finance other activities of government.
“Each year the debt stock will keep growing. If you go back to 2010, it is the same thing, we have been running budget deficits, we have not had surplus.
“We also have infrastructure deficit which we need to fix in order to create jobs and attract the private sector so that the country’s Gross Domestic Product (GDP) can grow,’’ she said.
She urged that Nigerians must note that the FG has a low revenue base, which is worsened by the fact that most of our revenue comes from crude oil.
She said, “That is why we sometimes say that Nigeria has a revenue problem, not a debt problem.
“Even if government needs to borrow on the short term, we need to grow revenue, and we need to encourage the private sector to finance projects.”
She revealed the objectives and policies by the FG to deal with the revenue and debt issues, citing the launch of the Strategic Revenue Growth Initiative and the Finance Act, with a target to grow Revenue-to-GDP to 15 per cent by 2025, increase in Value Added Tax (VAT), taxing electronic bank transactions, and curbing spending by revenue-generating agencies among others which she says are geared toward increasing revenue.
Recall Nairametrics reported last December that the DMO asserted that debt pulled Nigeria out of recession twice, making it a major propeller of growth. It also cited that public debt was critical in assisting Nigeria’s recovery from the recession brought on by economic shocks that strained the country’s revenue.