The Debt Management Office, DMO, warned the Federal Government against additional borrowing, saying 73.5 per cent of revenue generated this year will be used to service debt.
According to the DMO, the projected FGN Debt Service to Revenue ratio of 73.5 per cent for 2023 is high and cannot support higher levels of borrowing, and is also a threat to debt sustainability.
Consequently, the DMO advised the FG to focus on increasing revenue generation, stressing that attaining a sustainable Debt Service-to-Revenue ratio will require increasing FGN revenue from N10.49 trillion projected in 2023 budget to about N15.5 trillion.
It gave this warning as part of recommendations to the Federal Government, following an analysis of the nation’s debt profile in 2022.
The office said there is an urgent need to pay more attention to revenue generation by implementing far reaching revenue mobilization initiatives and reforms, including the Strategic Revenue Growth Initiatives and all its pillars, with a view to raising the country’s tax revenue to GDP ratio from about 7 per cent (one of the lowest in the world) to that of its peers.
It said the federal Government should encourage the private sector fund infrastructure projects through the Public-Private Partnership, PPP, schemes and take out capital projects in the budget that are being funded from borrowing, thereby reducing budget deficit and borrowing.
It also suggested that the Government can reduce borrowing through privatization and/or sale of government assets.”
