The International Monetary Fund (IMF) has warned authorities in Nigeria that, unless revenue is increased, the incoming president, President Mohammadu Buhari will hand over power to May next year may spend almost total revenue accruable to the Federal Government (FG) in debt servicing alone by 2026.
Currently, the Federal Government is spending over 80 per cent in servicing debts alone, leaving a paltry 15 to 20 per cent in implementing projects.
For now, the implication is that for every 100 kobo realized, less than 20 kobo will be available to fulfill electoral promises.
At th same time, the Federal Government has in its plans to increase Nigeria’s debt stock to N46.63 trillion trillion by end of 2022
“It is a reflection of low revenue. It is an existential issue for Nigeria. It is essential for macro-economic stability. It is important for the provision for social service,” Mr. Ari Aisen said.
Further x-raying the fiscal challenges, he regretted that as an oil exporter, Nigeria was not only unable to take advantage of the current global high oil prices to build reserves, but was also confronted by low earnings due to the subsidy on petroleum products.
The International Monetary Fund has warned that except the federal government put in place adequate measures to improve revenue generation, it’s entire earnings may be spent servicing debt by 2026.
The Fund revealed that based on a macro-fiscal stress test that it conducted on Nigeria, interest payments on debts may wipe up the country’s entire earnings in the next four years.
The IMF’s Resident Representative for Nigeria, Mr. Ari Aisen stated these while presenting the latest Sub-Saharan Africa Regional Economic Outlook, in Abuja.
The Federal Government is to spend N3.61 trillion servicing Nigeria’s debt burden in the 2022 fiscal period.
The N3.61 trillion to be used to service the nation’s debt represents about 34 per cent of the 2022 projected revenue of the Federal Government.
Nigeria is experiencing a worsening debt level as the country’s indebtedness is likely to reach N45 trillion following plans by the Debt Management Office plans to borrow an additional N6.39 trillion to finance the 2022 budget deficit.
The administration of President Muhammadu Buhari has been under series of attacks on the country’s rising debt levels.
