This recommendation was articulated by Mr. Davide Furceri, Division Chief of the Fiscal Affairs Department at the IMF, during a response to inquiries regarding Nigeria's high debt service-to-revenue ratio at the Fiscal Monitor press briefing held yesterday as part of the ongoing IMF/World Bank Annual Meetings in Washington, D.C.
Mr. Furceri noted that Nigeria's debt service-to-revenue ratio is excessively high, which limits the resources available for investment in programs and projects essential for accelerating the nation’s socio-economic development.
He acknowledged that Nigeria's debt service as a percentage of GDP has decreased from nearly 100 percent in the past to 60 percent currently. However, he emphasized that policymakers in Nigeria must prioritize revenue generation to further lower the proportion of revenue allocated to debt servicing.
He remarked, "It is essential to enhance the revenue-to-GDP ratio. In Nigeria, the debt service-to-revenue ratio stands at approximately 60 percent, indicating that a significant portion of the country's revenue is directed towards servicing debt. We advise countries like Nigeria to improve their revenue mobilization efforts, which would enable them to decrease the share of revenue spent on debt servicing."
He further stressed the importance of broadening the tax base to increase revenue and highlighted the need for Nigeria to implement a transparent and efficient system to aid the government in enhancing revenue collection.
The federal government currently reports the debt service-to-revenue ratio at 68 percent, a reduction from the 97 percent it inherited.