The Debt Management Office (DMO) has revealed that the reason for Nigeria’s rising public debt is due to increasing budget deficits over the years.
This was revealed 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 fiscal obligations.
What the boss of the DMO says
The DMO chief revealed that FG has been facing problems increasing its revenue base to ease its debt burden, citing rising budget deficits as the reason for continued borrowing.
“The debt to income ratio in 2021 was 71%. It is high because we have been borrowing for a long time. The debt is not a subsidy, there is interest.
“If we spend such a large part of our income on debt service, it means that there will be very few resources to fund other government activities.
“Each year, the debt stock will continue to grow. If you go back to 2010, it’s the same thing, we had budget deficits, we didn’t have a surplus.
“We also have an infrastructure deficit that we need to correct in order to create jobs and attract the private sector so that the gross domestic product (GDP) of the country can grow,” he added. she says.
She urged Nigerians to note that the FG has a weak revenue base, which is compounded by the fact that most of our revenue comes from crude oil.
She says, “That’s why we sometimes say Nigeria has an income problem, not a debt problem.
“Even if the government needs to borrow in the short term, we need to raise revenues and we need to encourage the private sector to finance projects.”
She revealed the objectives and policies of the FG to deal with revenue and debt issues, citing the launch of the revenue growth strategic initiative and the finance law, with the objective of increasing the revenue / GDP to 15% by 2025, increase in value added tax (VAT), taxation of electronic banking transactions and cuts in spending on revenue-generating agencies, among others, which she says aim to increase income.
Nairametrics reported last December that the DMO claimed that debt had lifted Nigeria out of recession twice, making it a major driver of growth. He also said public debt was key to helping Nigeria recover from the recession caused by economic shocks that have weighed on the country’s revenue.
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