Director-General, World Trade Organization (WTO), Dr. Ngozi Okonjo-Iweala, on Monday described Nigeria’s debt service to revenue ratio as alarming.
Dr. Okonjo-Iweala, who spoke at the Nigeria Governors’ Forum (NGF) 2023 induction for newly elected governors in Abuja, explained that the Federal Government has little or no money for recurrent expenditure and investment respectively.
She challenged states to improve on their states’ Internally Generated Revenue (IGR) and ensure transparency in the management of resources.
“Nigeria’s gross debt level has climbed from N19.3 trillion in 2015 to N91.6 trillion in 2023. The debt-to-GDP ratio has almost doubled from 20 percent to 39 percent over that time period.
“While the debt-to-GDP ratio may not look so alarming as revenues decline, the burden of debt servicing has increased dramatically.
“The debt service to revenue ratio is certainly alarming at 83.2 percent in 2021 and 96.3 percent in 2022, according to the World Bank.
“This means that at the federal level after servicing our debt, there is little room to pay for recurrent expenditures let alone investment.”
Okonjo-Iweala warned that it would be difficult for the incoming administration to address the fiscal deficit with an oil subsidy bill of N3.36 trillion.
She noted that the deficit was made worse by revenue losses from oil theft.
The WTO chief added: “On the revenue side, states have a substantial responsibility. Too few states are raising internally generated revenue of any significance.
“Data from the National Bureau of Statistics and State Audited Financial Statements by the civic-tech group BudgIT indicated that 33 states relied on federal transfers for the majority of their revenues.
The week-long event, holding at the Banquet Hall of the Presidential Villa, is being attended by re-elected and elected governors, past governors, members of the international community and resource persons drawn from across various disciplines.
The WTO boss, who spoke on the theme, “Task of Nation Building,” painted a gloomy portrait of the nation’s economy, urging the governors to learn and imbibe best practices that can help them deliver on their promises to the electorate.
Okonjo-Iweala said: “Nigeria’s gross debt level has climbed from N19.3 trillion in 2015 to $N91.6 trillion in 2023. The debt-to-GDP ratio has almost doubled from 20 per cent to 39 per cent over that time period.
“While the debt-to-GDP ratio may not look so alarming, as revenues decline, the burden of debt servicing has increased dramatically.
“The debt service to revenue ratio is certainly alarming, at 83.2 per cent in 2021 and 96.3 per cent in 2022, according to the World Bank. This means that at the federal level, after servicing our debt there is little room to pay for recurrent expenditures, let alone investment.
“Excellencies, please watch your debt profiles, and keep careful control of expenditures, even as you invest in infrastructure, education, and basic health systems. Please endeavour to pay teachers, health workers, and others their salaries, and retirees their pensions.”
Okonjo-Iweala urges caution in debt profiles and expenditure control while emphasizing the importance of paying salaries, pensions, and investing in infrastructure, education, and health systems.
Explaining further, Okonjo-Iweala said, “In this gloomy and uncertain global context, Nigeria has to work much harder to avoid falling even further behind.
“Dear governors, I remain convinced that a better future is within our collective grasp. But to move ahead and seize it, we will need political and business leaders at the state and national levels to form a compact in pursuit of pro-growth and pro-development policies.
“We ought to be seeking to double our growth rate and sustain that higher growth until we attain upper middle-income status. We can also aim to double Nigeria’s share of world trade from 0.33 per cent to 0.66 per cent within a decade,” she said, adding that “To build such a compact, we need trust.
