Nigeria needs to efficiently raise revenues and manage its expenditure if it wishes to resolve its debt issues, according to Ari Aisen, Resident Representative of the International Monetary Fund (IMF) Office in Nigeria.
Aisen made this remark at the Proshare WebTV online event organised recently for the general public.
Corroborating the Debt Management Office’s position on the need for Nigeria to address current revenue shortfalls, Ari Aisen said, “The DMO is just trying to do its best in terms of financing the spending needs of the government. However, It is very clear that in order to resolve the debt issue of Nigeria, you need to concentrate on revenues and expenditures.”
He explained that Nigeria’s high expenditure in relation to its low revenue base is contributing to the country’s rising debt.
“Nigeria’s debt position has deteriorated because the government is spending more than it’s actually getting in revenues. As simple as that.”
He advocated for fiscal discipline, highlighting that it was a major way to reduce excessive spending and ultimately address Nigeria’s current debt position.
According to him, “fiscal discipline requires, as in any household, that you cannot permanently spend beyond what you raise in revenues simply because it becomes unsustainable. It is critical that you rely more on your own revenues, to finance your own expenditures.”
The resident representative tasked Nigeria to efficiently target its spending towards enhancing social welfare and improving standard of living. He however noted the importance of revenues for infrastructural development, improving social welfare and avoidance of issues relating to Ways and Means Advances.
“The issue of revenue is existential for Nigeria, because on one hand, you need more revenues for spending on social needs and infrastructure that is efficient, but you also need more revenues to avoid having to get financing from the central bank, which is extremely inflationary.
“Therefore, the revenue piece in all this is highly essential for Nigeria to achieve macroeconomic stability, reduce inflation and rein in on the liquidity in the market on one hand, and on the other hand, raise resources to spend properly on efficient spending that will contribute to inclusive growth, creation of employment, infrastructure, health, education and social protection. This is the challenge for Nigeria.”
Ari Aisen advocated for good governance and efficient tax administration whereby all entities are paying taxes and seeing its impact on national development.
According to him, “the willingness of corporations, individuals, to pay their taxes goes hand in hand with good governance and use of funds. One aspect of it is you cannot rely only on few corporations paying the entire tax bill. Bringing everyone into the net to contribute to the tax effort is essential.”