Nigeria’s Revenue to GDP is Low says IMF

• Nigeria’s Revenue to GDP is Low says IMF

The International Monetary Fund has said Nigeria’s revenue to GDP is low and poses a threat to the nation’s economic productivity, especially with the rising national debt.

Mr Amine Mati, a Senior Resident Representative and Mission Chief for Nigeria, IMF, disclosed this at the public presentation of the ‘Fall 2019 issue of the regional economic outlook for sub-Saharan Africa,’ in Lagos on Wednesday.

He said Nigeria’s debt to GDP ratio has increased in recent time from about 20 percent to 28 percent but still remain low when compared with other African nations.

He, however, said the nation’s weak revenue generation remains an issue and urged the government to up revenue generation by creating more jobs and revamping fiscal consolidation.

Mati said, “Nigeria’s debt has increased but the level is way below the average for the region. Even if we include the CBN overdraft and others, we are talking about debt to GDP ratio that does not go beyond 27 to 28 per cent to GDP and that is including AMCON overdrafts and others.”

Speaking on fiscal consolidation, he said, “For resource intensive countries and the non-resource intensive countries, one thing that is common is that when there is trade shock, they have to react. So, you lose revenues, debt goes up.

“In most countries, you would see debt is about 50 per cent to GDP and has increased since 2016 in all cases. But what is new is that most of the countries are back on a sustainable path and have plans to reduce debt through fiscal consolidation and they seem to have stabilised.”

“The growth in per capita to the GDP since 2016 has been sustained for the 12 group of countries and has stayed sluggish for the group of countries because they have to be dealing with trade shock and how they respond to the shock has also affected what is their path.”

Mr Bismarck Rewane, the Managing Director, Financial Derivatives Company and a member of the President’s Economic Advisory Council, explained that “We don’t have a debt crisis; we have a revenue problem but there are also other problems such as poverty, productivity. So, it is not as if we have a debt or revenue problem. Also, what we use our revenue for is also important.

“The government expenditure and the government investment multiplier is much lower than the private sector multiplier and the difference between the flow of wealth and the stock of wealth is a different story.”