FG working to protect Nigeria from debt crisis — DMO
By Emeka Anaeto, Emma Uja & Babajide Komolafe in Bali, Indonesia
The International Monetary Fund, IMF, has listed vulnerability to foreign debt as one of the major threats to economic growth amongst African countries, especially in the Sub-Sahara group which includes Nigeria.
But the Debt Management Office (DMO) of the Federation has said that the federal government is making effort to protect the country from such crisis.
The Director in charge of Africa at the IMF, Mr Abebe Selassie, who listed the challenges to growth in Africa said the countries’ debts were rising unsustainably, posing threats to their ability to deploy funds for economic development.
He also said that the consequences of the rising debt were the countries’ resources being channeled to debt servicing rather investment into growth enablers.
Selassie advised that not only should the debts be moderated but also that revenue generation should improve to address a weak debt servicing ratio to GDP and tax-to-GDP ratio.
But against the backdrop of this situation the Director-General, DMO, Ms Patience Oniha, while addressing journalists on the sidelines of the on-going annual meetings of the Bretton Woods institutions said the Federal Government is on top of the situation in the borrowing plans.
She explained that debt crisis means inability to service debt which is not the case with Nigeria.
She also stated: “Debt servicing means that you are able to repay your interest and principal when they are due so the key focus of that write-up is actually about revenue diversification. Maybe the media picked that report and chose to focus on debt which is what we’ve been saying.”
Oniha explained that the challenges are in the low revenue which has led to low revenue-to-GDP.
She stated: “We can’t stop talking about it, the figures are there, we are not generating as much revenue as we should. When you compare your revenue to your GDP, it’s low. You just heard from this presentation that Malawi has a tax to revenue ratio of 18 percent while we are talking of six percent back home so something is wrong. We can’t run from the fact that we need to generate more revenue.
“Generating more revenue does not mean we should focus only on increasing production in the Niger Delta or praying for oil prices to rise, we have to generate long-term revenue. How do you generate that? You have to enforce compliance, which is all about increasing the tax base and making sure that those who are paying are paying the correct amount and not just paying a small amount to escape.
“The option that was talked about here was about raising taxes, so let’s put it within context. I have lived in Nigeria for long to know that once anything happens to oil, we are panicking, why? Because oil at some point counted for 80% of our revenue and most of our foreign exchange comes from there so we can’t shy away from tax revenue.”
Earlier at the presentations by Selassie, Nigeria’s Minister of National Planning, Udoma Udoma, had said Nigeria’s debt-to-GDP ratio of 19 percent was still low enough not to pose any major threat of debt crises.