Nigeria’s Minister of Finance, Mrs Kemi Adeosun has explained the reason the International Monetary Fund IMF was concerned over the debt service ratio to revenue of the country.
Mrs Adeosun said this at a news conference after the launching of the International Monetary Fund’s Regional Economic Outlook report on Sub-Saharan Africa, in Abuja, Nigeria’s capital. The IMF in its latest economic report, put the country’s external debt service to revenue at about 66 per cent.
Mrs Adeosun said that the country’s debt profile to GDP remained low; however, the cost of servicing loans had gone up due to fall in government revenue. “The problem is not that our debt is too high, but that our revenue is too low. It is revenue you use to pay debt and our revenue in Nigeria right now is very low.”
“Most of our debt matures between two years. That means that the actual amount of interest we are paying is significant. What we are doing right now is refinancing most of that debt, especially those maturing within the next two years. We are also working on improving government revenue through tax. Our tax to GDP is six per cent; we are one of the lowest in the world. Ghana is 15 per cent, South Africa, 24 per cent.
“So what we are doing is working very hard to see how we can get more people into the tax net and how to get those who are already in the
tax net to pay the right taxes,’’ she said.
