Experts across Nigeria have advised the Federal Government to expand its tax base and dispose identifiable assets to end the country’s rising debt profile.
Nigeria’s total public debt stock comprising external and domestic debts of the Federal Government, 36 states and the Federal Capital Territory (FCT) jumped by 0.22 percent to N22.429 trillion (or $73.213bn) in the third quarter of 2018, up from N22.38 trillion (or $73.208bn) recorded in the previous quarter, Debt Management Office (DMO) disclosed few weeks ago.
The country’s debt to GDP ratio is over 60 percent and total fiscal deficits in 2019 proposed budget stood at N2.41 trillion, N461.2 billion higher compared with 2018 passed budget.
Head of Banking and Finance Department, Nasarawa State University, Uche Uwaleke, urged the Federal Government to broaden its tax base to improve its tax-to-GDP ratio, stressing that the Federal Inland Revenue Service (FIRS) and Nigerian Customs Service (NCS) must step up to realise more tax revenue.
Uwaleke berated the 6 percent tax-to-GDP ratio of the country, stating that the ratio was low given the large size of the economy, but encouraged the NCS to design new measures to tackle smuggling to boost revenue generation.
Going further, he called on the government to dispose identifiable assets or privatise them in order to generate revenue and lessen the country’s debt burden, adding that government needed to place more priority on agriculture and solid minerals to boost non-oil tax revenue, foreign reserves and exchange rate.
Sola Oni, CEO, Sofunix Investment and Communication, said the country’s unabated rise in indebtedness was an indication that the country’s expenditure outweighed its revenue.
“There is no crime if a country owes but on what basis? Is it for consumption or investment? This is why Nigeria cannot be compared to advanced economies where investment in infrastructure largely accounts for their debt profiles,” Oni said.
To him, Nigeria debt could be better managed by reducing interest rates to spur economic growth, and this strategy has yielded positive results in some countries such as the UK and US.
He said quantitative easing, which involves the central bank purchasing government securities or other securities from the market in order to lower interest rate and boost money supply, could be employed to reduce debt.
Sheriffdeen Tella, a professor of Economics at Olabisi Onabanjo University Ago Iwoye, stated that the current debt level was very high for an economy like Nigeria that heavily depended on a commodity – oil.
Allocating more than 20 percent of budget to service debts has negative implications on sustainable development and provision of social amenities to the populace, he noted.
“The fact that large proportion of the debt is domestic provides some safety nets, but the loans must be well used and should not result in capital flight or mismanagement to create burdens on future generations,” he warned.
In what look as positive signal for revenue generation in Nigeria, Babatunde Fowler, executive chairman of FIRS, disclosed last week that his agency targeted N8.3 trillion tax revenue in 2019, N2.98 trillion higher than the amount realised in 2018.
Fowler reiterated commitment to continue to engage stakeholders, especially the legislature in order to get support that would improve tax compliance in Nigeria.
