Zainab Ahmed, the Minister of Finance, Budget and National Planning, has stated that Nigeria is struggling to service her debt because of the underperformance of revenue.
She noted that the low revenue was affecting the country’s ability to service debts and at the same time fund day–to–to recurrent expenditure.
“The underperformance of our revenue is causing a significant strain in our ability to service debt and to service government day-to-day recurrent expenditure and that is why all the work we are doing at the ministry of finance is concentrating on driving the increase in revenue.”
“Nigeria does not have a debt problem. What we have is a revenue problem. Our revenue to the GDP is still one of the lowest among countries that are comparable to us. It is about 19 per cent of the GDP and what the World Bank and the IMF recommend is about 50 per cent of GDP for countries that are our size. We are not there yet. What we have is a revenue problem,” the Finance Minister said.
Naija Buzz News had few months ago reported how Mrs. Ahmed noted that the country’s debt profile was not too high as being insinuated, saying that the problem was the poor revenue generation.
As of June this year, only about N2.04trillion had been generated out of the targeted N6.98trillion. The nation was also unable to meet up with her projected revenue generation for 2018. Only N3.96trillion was realised out of the projected N7.16trillion.
Mrs. Ahmed further spoke on how the FG plans to meet up and increase the poor revenue generation. According to her, the FG would implement bold and audacious reforms; adding that a lot of measures were being put in place. For example, VAT increase, excise duties on carbonated drinks and others had been proposed.
“The fact that our revenue is underperforming is not an excuse to bring down our revenue that is required to fund the national budget.
“In 2018, our revenue performed at the level of 58 per cent. Half year 2019, our performance moved up slightly to 58 per cent. But that is not an excuse to reduce the revenue. Because it means we are all sanctioning underperformance.
“So we have to push the agencies. We have to push ourselves to meet those targets. Those targets are not designed by the Ministry of Finance, Budget and National Planning, the agencies proposed those targets.
“But we sit down with them and interrogate them. For example, the NNPC has a production capacity of 2.5 million barrels per day.
“In 2019, they wanted a target of 2.5 million barrels per day but we insisted to be prudent and scaled it down to 2.3 million. And the performance is 1.98 million effectively including 100,000 per day that is used to settle cash call earnings but the capacity is there.
“So why should we not be looking at what do we have to do to make sure the capacity utilisation is attained.
“Why do we want to reduce it because we are underperforming? We are lucky that crude oil in 2018, out-performed the budget because we budgeted $60 per barrel and we ended up with an average of $67 per barrel.
“Otherwise, if we had lower prices, the 55 per cent performance wouldn’t have been achieved,” she said.
N2.5trillion out of the N10.3trillion 2020 Budget would be spent on debt servicing. And the government is still sourcing for more loans to meet up with infrastructural development.
The Nigerian Government is currently seeking a $3billion loan from the World Bank to finance the power sector.
The Finance Minister further stated that she would be meeting with the bank to present how the fund would be utilized for the power project.
She noted that the loan would be used for the development of power transmission and distribution networks.
“There is a proposed $2.5bn to $3bn facility for the power sector development programme in Nigeria and this will include development of the transmission networks and the distribution networks as well as removing the challenges that we currently have in the electricity sector.
“We are going to have a full meeting to discuss the power sector recovery programme and back home we have been working a great deal with the World Bank to design how this programme will be implemented.
“So we have an opportunity now to have a direct meeting with the leadership of the bank and to tell them the plan we have and how much we need from one to five years.”
Jonathan Dennis is an Editor at Naija Buzz News Network. He oversees the production and publication of stories on NaijaBuzz.News and on Naija Buzz News TV. The former banker left his banking job to join Naija Buzz News in 2019. He was briefly the head of the “Wetin Dey Happen” news team. Jonathan is a proud ‘Akwa-Ibomite’ from Akwa Ibom State, South-South Nigeria.