Nigeria’s debt profile has assumed a worrisome dimension and fast becoming a major drawback to economic growth and development.
It is based on this that the World Bank recently ranked the country fifth among countries with high debt risk exposure.
This stemmed from the fact that the country’s debt stock is outstripping government revenues and gradually becoming a usual feature in the annual budgetary cycle.
A breakdown of the country’s total public debt stock released by the Debt Management Office (DMO) for the third quarter that ended Sept. 30, 2022, showed that the figure stood at N44.06 trillion.
This comprises the total domestic and external debt stock of the Federal Government, all state governments, and the Federal Capital Territory (FCT).
Amid a decline in the government revenue occasioned by the economic downturn, the country has continued to seek financial support for budget deficits and infrastructure development thereby incurring more debt in the process.
Currently, the total public debt to the Gross Domestic Product (GDP) as of June 30, 2022, was 23.06 percent compared with the ratio of 23.27 percent as of March 30, 2022, and remains within Nigeria’s self-imposed limit of 40 percent.
Disturbed by the waves of sudden increases, some analysts have recommended ways to mitigate the challenge.
Dr. Bright Eregha, lecturer of Economics at Pan Atlantic University, said the Federal Government should expand its tax net to mitigate the rising debt.
“Utilising empirical means to incorporate more people into the tax bracket is imperative to boost government revenues and ensure debt payment,” Eregha said.
He said that the informal sectors which have been making money but are not paying any form of taxes to the authorities would be incorporated into the tax net.
The don said that the three tiers of government must begin to astute fiscal discipline to check rising debt.
“Embracing fiscal discipline is key in reducing duplicated items in the budget and checking reckless expenses.
“The previous budgets have been discovered to have various phantom projects responsible for raising government expenditure at the expense of paying debt and meeting other demands of society,” he said.
Prof. Sherifdeen Tella, Head of the Department of Economics, Olabisi Onabanjo University, Ogun State, said the Federal Government needs to discourage new debt by increasing oil output.
“Increasing oil production to meet OPEC quota and address oil theft will reposition government revenues in no distance time government can repay its debt adequately and address other developmental needs of the people,” Tella said.
According to him, the country can repay its debt with convenience by sealing leakages in government corporations.
“All the Federal Government revenue generating agencies should automate their operations to check financial leakages.
“Doing this will enhance governmental revenues and change the current economic narrative of the country,” he said.
Also, Dr. Uju Ogubunka, former Executive Secretary, of the Chartered Institute of Bankers of Nigeria (CIBN), said harnessing the prospects in the oil and gas sector could tackle the debt profile.
“Investing in the gas sector will change our earning capacity because it’s one of the most sought-after resources in the globe.
“As we have one of the largest reserves of gas among OPEC countries that are waiting to be harnessed to solve our debt and other developmental issues,” he said.
He noted that the three tiers of government should cut down the rising cost of governance and other luxury pegs associated with their offices.
“Reducing the financial privileges associated with their office is crucial because it will reflect the tough economic times of the country, and endear the people to their political representatives.
“The authorities can focus on the debt payment and endeavor to fix vital infrastructure that will spur economic growth,” he said.
Godwin Anono, the President Standard Shareholders Association of Nigeria, said the country could boost its revenue by harmonization of tax laws.
“The three tiers of government must decide to unify tax laws so as to enable the tax authorities to incorporate more people into the tax net.
“The country can adequately make money from taxes to repay its debts and address rising poverty in the economy,” Mr. Anono said.
He noted that the country must begin to have a national discourse on how to totally remove petroleum subsidies.
“Agreeing on the implementation of the total removal of petroleum subsidy is sacrosanct in improving government fiscal revenue and the issues associated with petroleum scarcity will be abetted,” Mr. Anono said.
He said that more private investment would begin to play in the sector and the challenges of rising debt could be resolved.
