Mrs. Zainab Ahmed, the Minister of Finance, Budget and National Planning, in spite of Nigeria’s burgeoning debt profile, which currently stands at over N26.2 trillion, has again affirmed her position that Nigeria does not have a debt problem but the challenge of under-performing revenues, which makes debt service obligation a struggle for the country.
The Minister spoke from Davos, Switzerland in an interview with Arise News at the ongoing conferences of the World Economic Forum (WEF), insisting that at about 19 per cent of its Gross Domestic Product (GDP), Nigeria has no debt crisis, but that of revenue.
“Nigeria has revenue, not debt problem. Our debt today is still just about 19 per cent of our GDP. The World Bank and the IMF recommend that an economy that is the size of Nigeria could have a borrowing that is up to 50 per cent of its GDP, but we are only at 19 per cent.
“Why I call it a revenue problem is because our revenues are under-performing and therefore our debt service obligation is a struggle for us. To address that, we are working to increase revenue; we are also working to reduce our cost of borrowing by refinancing our old domestic loans that are quite expensive in terms of rate and also expanding the tenor so that the debt payment obligation becomes easier.”
In buttressing her stand, the Minister said two Bretton Woods institutions— the World Bank and the International Monetary Fund (IMF) recommended that for economies the size of Nigeria’s, the comfortable threshold for borrowing should be 50 per cent of GDP, adding that the country is just at about 19 per cent.
She also addressed the issue of failure to meet revenue targets in the past few years, noting that the 2020 fiscal year provided positive hope to change the narrative.
According to her, all the key ministries, departments and agencies (MDAs) are working towards increasing every revenue aspect that they handle.