Abebe Selassie, the Director of the African department at the International Monetary Fund (IMF), has highlighted Nigeria’s struggle to generate sufficient tax revenue to support essential projects.
Speaking at the ongoing imf annual meetings in Marrakech, Morocco, Selassie expressed concerns that Nigeria’s mounting debt is primarily a result of its low revenue.
With a debt of N87 trillion and high loan interest rates, Selassie emphasized that debt servicing is consuming a significant portion of Nigeria’s revenue, limiting its capacity to fund critical services.
He attributed the country’s tax revenue challenges to over-reliance on oil revenue, especially during periods of high oil prices, as well as the subsidy regime, which diverts government resources.
Selassie noted that the government resorts to domestic financing due to difficulties in accesinternational capital markets, leading to the crowding out of the private sector and putting pressure on the exchange rate.
He commended President Bola Tinubu’s efforts to unify exchange rates and eliminate the petrol subsidy, which he deemed the right decision for the country.
Selassie stressed the need for a comprehensive package of reforms, emphasizing that these reforms must complement one another to be effective.
He also urged the government to tighten monetary policy and increase tax revenue mobilization.
While recognizing that the current administration is still new, with the recent appointments of the Central Bank Governor and the Minister of Finance, Selassie expressed hope that they will guide the country in the right direction.
He offered the IMF’s support in providing policy advice to the government.
sing Regarding debt restructuring, Selassie stated that he is unaware of any discussions with the Nigerian government on the country’s debt profile.