The Debt Management Office (DMO) says the government can reduce its dependence on borrowings to finance budget deficits by improving its revenue drive and prioritizing expenditure.
The Director-General of the DMO, Patience Oniha, said this on Tuesday during a presentation at an Executive Course on Budgeting and Fiscal Responsibility organized by the Fiscal Responsibility Commission in Abuja.
Oniha’s paper was titled “Debt Sustainability Challenges and Strategic Revenue Mobilisation Initiative”.
She said that the country had run deficit budgets for many decades, which made borrowings from local and external sources imperative.
“A budget may be surplus, balanced, or deficit. Nigeria has run deficit budgets on a consecutive basis for decades.
“The financing of the deficits through borrowing from local and external sources is the principal reason for the growth in debt stock and debt servicing.
“One way to reduce budget deficits is to grow revenues; the other way is to prioritize expenditure and cut waste and leakages,” she said.
She, however, said that the country’s total debt stock was not only that of the Federal Government but also that of the sub-national governments.
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She said that, in the midst of low revenue, the government was able to deliver on infrastructure development and other responsibilities through borrowings.
According to her, borrowing is not peculiar to Nigeria as countries across the world are borrowing.
“Debt levels are rising everywhere. Global revenue dropped as a result of Covid-19, and the Russian-Ukraine conflict has also increased borrowing.
“Our problem is debt service to revenue ratio,” she said.
She added that a larger percentage of the country’s borrowings were concessionary loans from multilateral and bilateral sources.
She said that Nigeria’s debt to GDP ratio was 23 percent, which is still within the country’s self-imposed limit of 40 percent.
She said that the figure was also within World Bank/IMF recommended limit of 55 percent for countries within Nigeria’s peer group and 70 percent for ECOWAS countries.
