President Bola Tinubu of Nigeria has affirmed his commitment to ending the country’s over-reliance on borrowing for public spending. Speaking at the inauguration of the presidential committee on fiscal policy and tax reforms, Tinubu expressed his determination to address barriers hindering business growth in Nigeria and to transform the tax system.
Nigeria’s total public debt has surged by 501 percent over eight years to reach N72.55 trillion in March 2023, primarily due to increased borrowing exacerbated by global economic challenges. The debt comprises N19.64 trillion of foreign debt, N30.21 trillion of domestic debt, and N22.7 trillion of Ways and Means lending by the Central Bank of Nigeria to the Federal Government.
In 2022, Nigeria spent N3.36 trillion to service debts, a 14.68 percent increase from the previous year, with N1.07 trillion for external debts and N2.56 trillion for domestic debts.
Tinubu emphasized that Nigeria’s reliance on borrowing has led to reduced fiscal flexibility and hindered economic development. He set up the presidential committee on tax reform to address tax law reform, fiscal policy design, coordination, and revenue administration.
The President’s goals include achieving a minimum of 18 percent Tax-to-GDP ratio within three years, improving Nigeria’s revenue profile, and creating a conducive business environment. The committee, comprising experts from the private and public sectors, is empowered to provide practical support for the implementation of recommended changes.
World Bank’s Country Director for Nigeria, Shubham Chaudhuri, noted that the removal of fuel subsidies increased government revenues by close to two percent of GDP, strengthening the economy. The World Bank supports Nigeria’s efforts to enhance its tax system and fiscal policies to achieve sustainable development and economic growth.
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