Apparently worried by the Federal Government’s refusal to heed its advice on loan sustainability, the International Monetary Fund (IMF), yesterday doubted Nigeria’s capacity to repay its rising debt stock.
The Fund’s anxiety over Nigeria’s loan repayment ability may have been triggered by President Muhammadu Buhari’s recent approvals to his ministers to go all out to borrow from international lenders to fix rail and road infrastructure.
It was against this backdrop that the Minister of Transportation, Mr Rotimi Amaechi, opened negotiations with India and Russian Exim Bank to borrow $46 billion for the projects.
But speaking at the public presentation of Spring 2018 Regional Economic Outlook for Sub-Saharan Africa, IMF said the country has to increase domestic revenue. “The number of countries in debt distress has increased. From six countries in 2014 to eight in 2015; to 10 in 2016, and today 15 countries. These are low-income economies,” IMF senior resident representative and mission chief to Nigeria, Amine Mati, said.
“Now, I know the question that is going to come from here is: Where is Nigeria? Nigeria is not considered a low-income economy. Nigeria’s debt stock figure, which is 20 to 23 percent of the gross domestic product, is still quite low by any standard. The issue is capacity to repay the debts. So, interest payment to revenue is an issue. “There is a lot that can be done to increase revenue very quickly. If you look at all the various forms of taxation, you can take another look at property tax, then you can have tax administration and improving compliance. You know, in Nigeria, complying with many of the taxes is still very low.
“We think that for the region, there needs to be three to five percent Gross Domestic Products (GDP) growth is needed. How do you get there? In Nigeria, you can remove a lot of exemptions and expand income taxes.
“Those are the types of measures that, as part of a comprehensive package, can make the difference in increasing revenue mobilisation,” she said. (The Sun)