Recall that the 2022 fiscal performance report for January through April, revealed that Nigeria’s total revenue stood at N1.63 trillion while debt servicing stood at N1.94 trillion, showing a negative variance of over N300 billion.
While the FG has consistently come under the hammer of Multilateral agencies and economists who have warned about the rising cost of debt service, the country’s Finance Minister, Zainab Ahmed thinks otherwise.
According to the Finance Minister, and the Director General of the Debt Management Office, Patience Oniha, both have insisted that the country currently has a revenue problem and not a debt problem as posited.
The reports of the country’s revenue stream in the first four months of the year, however, agree with the finance minister’s position.
The January-April fiscal report showed that gross oil and gas federation revenue for the period was projected at N3.12 trillion but as of April 30, only N1.23 trillion was realised.
When compared to the projected revenue amount, the revenue represents a mere 39% performance.
Oniha had previously mentioned that high debt levels would often lead to high debt services and affect investments in infrastructure.
She added that high debt levels could also reduce resources available for investment in infrastructure and key sectors of the economy.
Oniha further stressed the need for the country to adopt a debt sustainability method, which she defined as the ability to service all current and future obligations while maintaining the capacity to finance policy objectives without resorting to unduly large adjustments.
According to the reports of a macro-fiscal stress test that was conducted on Nigeria by the International Monetary Fund, IMF, by 2026, interest payments on debts might wipe up the country’s entire earnings.
About two months after this warning by the IMF’s Resident Representative for Nigeria, Ari Aisen, Nigeria’s finance minister confirmed that Nigeria’s debt service cost surpassed its revenue in the first four months of 2022.