Budget and National Planning Minister, Senator Udoma Udo Udoma has explained that Nigeria’s debt service/revenue ratio appears high because the country is currently facing a revenue challenge. He however pointed out that as revenues improve, the ratio will consequently reduce.
The Minister, who was speaking at a Stakeholders’ Dialogue on the Implementation of the Economic Recovery and Growth Plan (ERGP) in Abuja on Tuesday, said to address this situation, a coherent and clear approach has already been set out in the ERGP to increase non-oil revenues and optimize government spending.
He pointed out that the Plan indicates that to achieve sustained growth the country will continue its current initiatives aimed at driving fiscal stimulus through a package of spending to stimulate private consumption and investments by businesses. “This is why our 2017 Budget proposal has dedicated 30% of the Budget to capital expenditure. We intend to achieve a minimum capital expenditure allocation of 30% in subsequent Budgets throughout the life of the Plan”.
To achieve this government must improve its revenue base so that we do not continue to rely on borrowing to fund our capital budgets. “As we improve our revenues we will be able to bring down our debt service to revenue ratio, which rose sharply when our (oil) revenues dipped,” he explained .
According to him, concerted efforts are in place to broaden Nigeria’s non-oil revenues, leveraging the significant progress already made by the non-oil collecting agencies to strengthen and improve non-oil tax revenues.
“As the ERGP indicates, our revenue mobilization efforts will involve, amongst other things, introducing measures to increase our independent revenues from our revenue generating agencies, as well as, cutting out waste by intensifying our current efforts to plug revenue leakages and inefficiencies in government spending.
“In the ERGP the government has also committed itself to exploring options to generate additional revenues by the restructuring and privatisation of carefully selected public enterprises. But, most importantly, the ERGP states that we will be taking measures to expand our tax to GDP ratio from the current 6% of GDP to at least 15% of GDP. We are already working on these tax review initiatives. The immediate focus of this Government is therefore on revenue enhancement. For the ERGP to achieve its intended results we must be able to mobilize substantial increases in government revenues over the life of the Plan. Revenue mobilization is therefore our number one priority,” he added.