Mathew Verghis, the World Bank’s country director for Nigeria, says Nigeria’s biggest fiscal challenge is weak revenue mobilisation rather than excessive debt.
Speaking during an interview on Channels Television on
Friday, Mathew Verghis, the World Bank’s country director for Nigeria, said
Nigeria’s debt profile is not the primary concern, stressing that increasing
government revenue should be the country’s priority.
“From our assessment, Nigeria doesn’t have a high
indebtedness problem, it has a low revenue problem,” Verghis said.
He said the country’s debt level, relative to the size of
its economy, is lower than that of many peer countries and should not be
compared with countries facing debt distress.
“When we looked at the numbers, Nigeria is a moderately
indebted country, meaning it has less debt relative to its economy than most of
its neighbours and many other countries,” he said.
“Nigeria is in a very different situation than Ghana, for
example, which is going through a debt restructuring.”
Verghis said borrowing is necessary to finance investments
whose benefits materialise over time, arguing that countries often raise debt
to fund projects that improve economic growth and living standards.
“Nigeria borrows for the same reasons that all countries
borrow. If you want to get results, if you want to deliver results to people,
then the money that you have on an annual basis is not enough,” he said.
“So you borrow, you get results, and that will improve your
ability to pay back.”
For instance, Verghis said expanding energy access to
millions of Nigerians requires significant upfront investment but would
ultimately strengthen the economy.
“To be able to connect, to give energy to 32 million
Nigerians, Nigeria needs to borrow money now,” the World Bank official said.
“But that money, with that increased access to energy,
Nigeria will become a wealthier country, and it’ll be then possible to pay
back.”
Verghis said Nigeria’s immediate priority should be to
increase government revenue, warning that low revenue, rather than debt levels,
poses greater risks to the country’s public finances.
“Nigeria’s debt is not particularly high, and in fact, it’s
quite moderate by international standards,” the country director said.
“Its revenues are very low by international standards, and
unless those revenues are raised, then it will not be able to pay back debt.”
Verghis said improving revenue collection would enable the
government to invest more in infrastructure and human capital, create better
jobs and reduce poverty over the long term.
The World Bank recently unveiled a new six-year country
partnership framework for Nigeria, which places job creation at the centre of
its support for the country through investments in infrastructure, healthcare,
agriculture, and digital connectivity.
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