Poor Revenue Base Threatening Debt Sustainability – DMO - Matrix Live Ng
Poor Revenue Base Threatening Debt Sustainability – DMO
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Poor Revenue Base Threatening Debt Sustainability – DMO

 

  • Urges Urgent Steps to Ramp Up Revenue 
  • .Chinese Loan Constitutes only 3% Of The Country’s Total Borrowing
  • .Canvases For Minimum 15% VAT  Increase 

The Director General of the Debt Management Office (DMO), Ms. Patience Oniha, on Thursday, described the poor revenue status of the country as a great threat to its debt sustainability efforts, calling for an urgent and pragmatic approach to solving the challenge.

Oniha made the suggestion during her presentation at a workshop for members of the Senate Committee on Local and Foreign Debts and House Committee on Aids, Loans and Debt Management.

The D-G, therefore, called for urgent actions to raise the nation’s revenue base.

Her words, “Debt has grown and we all know why. Revenue base is low and we often don’t achieve annual revenue targets in the annual budgets. Even if we achieve the revenue targets 100 percent, they are still too low for a country the size of Nigeria.

“We have been dependent on borrowing as a country for a very long time. We have been borrowing because revenue base is low. Because revenue base is low, it is now threatening debt sustainability.

“We need urgent actions to moderate the level of new borrowing because debt services/revenue ratio would have been low if revenue base had been been very strong.
“There has been a lot of talk about raising revenue. We now need urgent actions. We need a stronger revenue base to ensure that out debt remains sustainable.”

On what borrowed funds should be used for normally, the DMO boss said, “ideally we should deploy borrowed funds to capital projects, but we haven’t done too well in this regard. However, the government has gone ahead to source project funding from Sukuk through which N612.6 billion has been raised to finance projects since 2017.

She told them that the appropriate Value Added Tax (VAT) for Nigeria should be in the range of 15 per cent to 17.5 per cent as against the prevailing 7.5 per cent.

She, however, admitted that she knows the lawmakers will have to explain to their constituents why they had to support a VAT increase giving the current economic situation.

Mrs. Oniha: “Our debt has grown and we all know why. Revenue base is low and we often don’t achieve annual revenue targets in the annual budgets. Even if we achieve the revenue targets 100 per cent, they are still too low for a country the size of Nigeria.


Shedding more light on the controversial Chinese loan, the Director-General of the DMO, said Nigeria has only borrowed $3.6 billion from the Chinese government which is about three per cent of the country’s total borrowing and the loans are tied to specific projects “that must be validated before they’re paid.

She told the legislators that “if borrowed funds are wisely invested, it should generate revenue”, and lamented the opportunity the country missed from the sales of crude oil at a time the price is high, although Nigeria was experiencing “challenges with other revenue lines.”
https://tribuneonlineng.com/sustained-borrowing-low-revenue-base-threats-to-debt-sustainability-%E2%80%95-dmo/

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