Barely 24 hours after the International Monetary Fund advised Nigeria to increase tax to raise more revenue, the Federal Government on Thursday said its low revenue was affecting its ability to service debts and fund day-to-day recurrent expenditure.
The Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, during an interview with journalists on the sidelines of the World Bank/International Monetary Fund meetings in Washington DC, United States, noted that although Nigeria did not have a debt problem, she said, “underperformance of our revenue is causing a significant strain in our ability to service debt.”
She also justified the $3bn loan the country was seeking from the World Bank, saying the money would be used to finance the power sector.
A quarter (N2.5trn)of N10.3trn budget President Muhammadu Buhari presented to the National Assembly on October 8 would be spent on debt servicing.
While the Federal Government voted N4.88trn for non-debt recurrent expenditure, only N2.14trn was allocated to capital projects in spite of the huge infrastructural deficit in the country.
Why we are borrowing fresh $3bn from World Bank – Ahmed
The finance minister, Ahmed, however, said the fresh $3bn loan Nigeria was seeking from the World Bank would be spent on reforms in the power sector.
The Debt Management Office had said that the nation’s total public debt rose by N3.32tn in one year to N25.7tn as of the end of June 2019.
The Federal Government owed N20.42tn as of June 30, 2019 while the 36 states and the Federal Capital Territory had a total debt portfolio of N5.28tn.
In 2017, the revenue target was N5.08tn out of which N2.7tn was realised. The Federal Government’s revenue projection for 2018 was N7.16tn out of which only N3.96tn was achieved. In 2019, the Federal Government’s projected revenue was put at N6.98tn. As of June this year, about N2.04tn had been realised.
– Ifeanyi Onuba, Washington DC, PUNCH