The Director -General of the Budget Office of the Federation, Ben Akabueze has said that Nigeria is currently going through significant fiscal challenges.
Akabueze said this on Thursday
during a consultative forum on the 2023-2025 Medium Term Fiscal Framework on Thursday in Abuja.
A fiscal challenge is a situation where a government is having issues in financing its regular activities, including providing social services, paying for defense, and managing other government functions.
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There are a number of ways nations can attempt to address a fiscal challenges and they often involve hardship for many citizens.
The fiscal challenges facing Nigeria may have worsened in the first quarter of this year as the country’s debt service to revenue ratio rose to 80 per cent.
This is an increase of 400 basis points when compared to the 76 per cent which it was at the end of 2021.
A debt service to revenue ratio of 8 per cent implies that for every N100 earned by Nigeria, N80 is spent servicing debt.
The escalating fiscal sector deficits with the attendant rising debt ratios are part of the weak links in the domestic economic environment.
Nigeria’s poor revenue growth in a period of expanding government expenditures has continued to soar the budget deficit levels in the first quarter of 2022, similar to the trend witnessed in 2021.
Nigeria’s total debt stock as at the first quarter of 2022 had risen to N41.60trn against N39.56trn in December 2021, which represents a N2.04trn increase in a period of three months.
Speaking on the challenges, Akabueze said while Nigeria had improved transparency and accountability in the oil sector, more work needed to be done in boosting revenue.
Nigeria recorded its best performance in the open market improving by 24 points in transparency in the latest Open Budget Initiative Report.
He said, “Our country is going through significant fiscal challenges. As you would hear shortly when the minister will give her presentation which will indicate our contribution and challenges.
“It is our hope and visions that when the time comes, you will engage in providing solutions and suggestions about what we could do or what we could do better or more in addressing these challenges.
“As you can see, the challenges are well instituted and well articulated but of course you would really think that we have misdiagnosed the problems, I can’t wait to hear your own perspective to these problems.
“The point I am making is let this not be a session of simply recounting or look over the challenges but one that is intended to improve our own thinking better and how to address these well known challenges.”