Ms. Patience Oniha, the director general of the Debt Management Office (DMO), has asked the national assembly carry out due diligence in the budget process to reduce the country’s rising debt profile.
Oniha made the call on Thursday at the public hearing on the 2023-2025 medium term expenditure framework (MTEF) and fiscal strategy paper (FSP), organised by the house of representatives committee on finance.
In the first quarter of 2022, the country’s public debt rose to N41.6 trillion from N39.56 trillion recorded at the end of December 2021.
Oniha said the lawmakers must scrutinise the capital and overhead components of the budget to bring down borrowing.
According to her, budget deficits have been the main contributing factor to the government’s debts.
“Debt has grown and that has come really from the annual budget. There are three levels where those borrowings have increased. We have been running a deficit budget for many, many years,” she said.
“So, each time you approve a budget with a deficit by the time we raise that money because when you approve it is giving us a mandate, authority to borrow, it will reflect in the debt stock, so debt stock will increase.”
On Nigeria’s tax-to-GDP ratio, she said it is one of the lowest in the world.
The tax-to-GDP ratio is a measure of a nation’s tax revenue relative to the size of its economy.
It is used to determine how well a nation’s government directs its economic resources.
“A World Bank report showed that in terms of debt to GDP ratio, Nigeria is low but for debt service to revenue ratio, we are very high. So, if you look at tax- to-GDP ratio of these other countries, they are in multiples of Nigeria,” Oniha explained.
“The World Bank survey report of about 197 countries revealed that Nigeria is number 195, meaning we beat only two countries and that was Yemen and Afghanistan and I don’t think we want to be like those places.”