IMF wants Nigeria to focus more on increasing tax revenue

The International Monetary Fund (IMF) has asked the Nigerian government to put in place a more efficient tax collection system in order to broaden its revenue base.

The Fund’s position was expressed by Mr. Davide Furceri, Division Chief, Fiscal Affairs Department of the IMF while responding to a question on how Nigeria could best address her high debt service /revenue ratio, at yesterday’s Fiscal Monitor press briefing at the on-going IMF/World Bank Annual Meetings in Washington DC.

He said that Nigeria’s debt service/revenue ratio was too high, leaving little resources for investments in programmes and projects that could grow the nation’s socio-economic development as fast as desired.

Though he said that Nigeria’s Debt Service to GDP has reduced from a near 100 percent in the recent past to 60 percent, the IMF chief said that the nation’s policy makers needed to focus more on generation of revenue in order to further reduce the percentage of its revenue that goes to debt servicing.

He stated: “There is need to grow the revenue/GDP ratio. For a country Like Nigeria, the Debt Service /Revenue is about 60 percent. What that means is that a larger part of the revenue of the country goes into debt servicing. What we recommend for countries like Nigeria- if they can improve their revenue mobilization, they will be able to reduce the portion of the revenue that goes into debt servicing.

“It is important to broaden the tax base in order to have more revenue and especially in Nigeria to put in place a system and mechanism that is transparent and efficient to assist the government in collecting more revenue.”

The federal government has put the current debt service/revenue ratio at 68 percent, down from 97 percent it inherited.