The International Monetary Fund said that with the size of the Nigerian economy, the country has the capacity to service its debt of over N32.9 trillion.
The Fund, which described Nigeria as a trustworthy ally, advised the Federal Government to always put in place fiscal buffers during the period of surplus that it could fall back on during the period of economic hardship.
Nigeria’s debt rose by 700 billion naira to reach 32.9 billion naira at the end of December last year.
The federal government has recently come under heavy criticism for its accumulation of debt.
During the COVID-19 pandemic in 2020, the IMF Executive Board approved $0.4 billion as emergency assistance to Nigeria to deal with the pandemic.
The facility provided through the Rapid Financing Instrument was part of efforts to address the severe economic impact of the COVID-19 shock and the sharp drop in oil prices.
Speaking on development, the IMF Resident Representative in Nigeria, Mr. Ari Aisen, advised Nigeria and other countries in the African sub-region to prioritize their spending in this time of economic downturn.
Aisen was among the panelists convened over the weekend by the Nigerian Economic Summit Group to provide perspective on the critical challenges facing the Nigerian economy ahead of the upcoming general elections in 2023.
He said: “When you face a shock, you need someone to lend you a hand. Of course, you will pay your debt. There is no doubt that Nigeria with a great economy will be able to service its debt and pay all its creditors.
“I think it is very important that we keep this in mind, otherwise without these funds, adapting to the challenges will be too difficult. You will not be able to pay salaries, you will accumulate arrears, you will not be able to cope with the emergency if you have not accumulated the right stamps at the right time.
“It is important for Nigeria to have development partners who can even provide funding as needed. There should be no pride in asking for help in and out of an emergency. Of course, the right economic policy must be developed.
“At the IMF, we advise people to develop their capacities. Our member countries should be able to develop stamps. The facility IMF extended to Nigeria at the time of the COVID-19 pandemic was to help purchase an oxygen mask, supply the hospital with vital equipment to deal with the pandemic.
The IMF representative in the country has called for the adoption of a strong tax system in Nigeria as oil revenues are no longer sustainable.
“On the issue of taxation, we need a progressive tax system. In Nigeria, there are a lot of funds to finance with the public good; in the areas of health, education, nutrition, security, police. There are many things to finance with funds.
“The decision of taxpayers and the government must be such that trust can be established. The provision of public goods must be transparent.
“Good governance in a responsible manner can be provided by government. Make the most of the collections. If you put these two things together, there is a chance that the government collects more and the government provides the services to the people.
“There will be more space for the private sector to thrive i.e. unlocking the huge potential of the system for Nigeria to succeed. I have no doubt in my mind that Nigeria has huge potential and will succeed,” he added.
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