The International Monetary Fund, IMF, has once again expressed concerns about Nigeria’s debt servicing capacity, as the size of the total debt keeps rising against its revenue.
Speaking at a press conference yesterday on the sidelines of the on-going World Bank Group Spring Meetings in Washington DC, Mrs Catherine Pattillo, Assistant Director, Fiscal Affairs Department, IMF, described the country’s debt to revenue ratio, which she put at 63 percent, as “extremely high.”
She, therefore, recommended that in line with the IMF staff report on Nigeria, the Fund would want to see increases in tax rates and collection capacity to help reduce government’s budget deficit while financing key development projects.
She stated: “The ratio of federal government interest payment on debt to revenue is extremely high at 63 percent. So there is a need to build revenue so that you have more space to spend for infrastructure, social safety nets etc otherwise interest is eating up most of your revenue.
“So building revenue is key and how do you do that? The recommendation in the IMF staff report is to broaden the tax base by removing exemptions, to rationalize tax incentives, in particular, to strengthen tax compliance and our recommendation to raise the VAT rate.”
