The president of the African Development Bank, Akinwumi Adesina has expressed the bank’s worry over Nigeria’s debt to revenue ratio.
Adesina, speaking at the opening of the two-day Mid-term Ministerial Performance Review Retreat at the Presidential Villa on Monday in Abuja said despite Nigeria’s debt to the GDP remaining moderate at 35 per cent, the government must take decisive action to tackle its debt challenges for the economy to grow.
He said, “Nigeria must decisively tackle its debt challenges. The issue is not about the debt-to-GDP ratio, as Nigeria’s debt-to-GDP ratio at 35% is still moderate. The big issue is how to service the debt and what that means for resources for domestic investments needed to spur faster economic growth.
“The debt service to revenue ratio of Nigeria is high at 73%. Things will improve as oil prices recover, but the situation has revealed the vulnerability of Nigeria’s economy. To have an economic resurgence, we need to fix the structure of the economy and address some fundamentals.”
According to the Debt Management Office, Nigeria’s total public debt, which includes the federal and state governments, had climbed to N35.46 trillion at the end of the second quarter of 2021.
Akinwumi noted that while Nigeria faces the challenge of revenue concentration due to a mainly one-sided source, he stated that structural bottlenecks that limit the country’s productivity need to be removed for other sectors to generate revenue.
“Nigeria’s challenge is revenue concentration, as the oil sector accounts for 75.4 % of export revenue and 50 % of all government revenue.
“What is needed for sustained growth and economic resurgence is to remove the structural bottlenecks that limit the productivity and the revenue earning potential of the huge non-oil sectors.”