Debt Management Office Advocates Efficient Tax Administration In Nigeria
Salamatu Ejembi, Lagos
Nigeria needs to operate an efficient tax administration that would ensure greater compliance to remittances devoid of all forms of evasions in the system.
The Director-General of the Debt Management Office, DMO, Ms Patience Oniha stated this in Lagos at the just concluded 2022 Capital Market Correspondents Association of Nigeria, CAMCAN, workshop themed: “Nigeria’s Public Debt and the Capital Market.”
Ms Oniha said Nigeria needed to operate an efficient tax administration to tackle revenue challenges, stressing that _”the “revenue challenge remains one of the most critical policy issues of the Nigerian Government.”
“The current revenue problem is compounded by leakages such as an increase in oil theft and petrol subsidy, both of which have significantly reduced the revenue from oil sales that used to account for the bulk of government revenue,” she said.
Ms Oniha noted that the outlook of both the local and international markets was becoming tighter with rising interest rates.
She, therefore, stressed the need for the country to urgently moderate its new borrowings and ensure that public debt is sustainable through accelerating its revenue base to shore up non-oil revenue and rationalising expenditure.
Ms Oniha said that the nation’s total public debt to Gross Domestic Product (GDP) of 23.06% as of June 2022, was still within Nigeria’s self-imposed limit of 40%, the World Bank/International Monetary Fund (IMF) recommended limit of 55% for countries within Nigeria’s peer group and 70% for ECOWAS Countries.
She, however, argued that debt service to revenue was extremely high, a situation that needs urgent steps, to boost the revenue and enhance public debt sustainability.
She said; “Nigeria’s public debt stock has grown consistently over the past decades and even faster in recent years. Consequently, debt service has continued to grow.
“Nigeria’s low revenue base compounded by dependence on crude oil resulted in budget deficits over the past decades. Efforts at increasing non-oil revenue are yielding positive results…Dependence on borrowing and low issue base are now threatening debt sustainability. With a low debt to GDP ratio, Nigeria’s debt service to revenue ratio would have been low if revenue was strong.”
According to her, most countries around the world have placed more emphasis on taxation as a principal source of funding for the government while the reverse is the case in Nigeria.
Aside from taxation as a source of revenue generation, Ms Oniha stated that borrowings must be tied to projects that would generate commensurate revenues to service loans used to finance the projects.
She also said that physical assets such as idle or under-utilised properties could be redeveloped for commercialisation to generate revenue.
Speaking on initiatives and activities for debt sustainability, Ms Oniha said that Nigeria deployed debt management tools of the World Bank and IMF that enable debt sustainability.
She noted these tools include an annual Debt Sustainability Analysis (DSA) and a Medium Term Debt Management Strategy (MTDS) every four years.