Debt servicing: Experts urge Nigeria to increase crude oil production

Some financial analysts have urged the Federal Government to increase its crude oil production to enhance its revenue generation, in order to tackle the rising debt servicing profile.

The analysts gave the advice in separate interviews with the News Agency of Nigeria on Wednesday in Lagos.

NAN reports that they were reacting to the claim by the International Monetary Fund (IMF) that debt servicing might gulp 100 per cent of the government’s
revenue by 2026 if the government fails to implement adequate measures to improve revenue generation.

The IMF’s Resident Representative for Nigeria, Ari Aisen, had made the claim while presenting the Sub-Saharan Africa Regional Economic Outlook report in Abuja.

According to him, based on a macro-fiscal stress test that was conducted on Nigeria, interest payments on debts may wipe up the country’s entire earnings in the next four years.

The Chief Executive Officer (CEO), Cowry Asset Management, Mr Johnson Chukwu, told NAN that the Federal Government needs to raise petroleum production to boost its revenue projections.

“ The government must address the headwinds associated with pipeline vandals so as to meet the international oil quota of the Organisation of the Petroleum Exporting Countries.

“ Then the country can make adequate revenue from crude oil sales and meet other obligations beyond debt servicing,” he said.

According to him, the federal government should put a seal on new debts and give priority to public-private partnerships in fixing infrastructure.

“Most of the debts incurred in the country are linked to projects sometimes not viable to pay back the debts.

“ The government should adopt a more alternative approach in fixing key infrastructure without borrowing and being in debt,” he said.

Also, the former President, Chartered Institute of Taxation of Nigeria (CITAN) Dr Mcantony Dike, said since debt servicing was declining earnings, the Federal Government should utilise science to boost Value Added Tax (VAT) collection.

“The VAT collection is a form of indirect taxes, which is imposed on a specific commodity in the economy.

“ Raising revenue is crucial because of too much competing demand of scarce resources currently,” he said.

According to him, the tiers of government should reduce the high cost of government to reflect the times.

“ Reducing the money expended on public office holders will free funds to address other pressing needs such as debt servicing and other obligations meant for public goods in the country,” Dike said.

Also, the President, Progressive Shareholders Association of Nigeria, Mr Boniface Okezie, said the Federal Government should privatise some state-own companies.

“ Allowing more private sector players to have stakes in some government establishment will boost government revenue projections while the authorities will begin to make money from the thriving organisation in the country,” he said.

He noted that the Federal Government should enhance the business environment in order to attract foreign direct investment.

“Improving the ease of doing business will enable the country to be a hub for new businesses regardless of our challenges.

“Then the government revenue will begin to grow and the debt servicing will not be an issue,” he said. (NAN)