The World Bank: Falling revenues, not debt, are Nigeria's biggest fiscal challenge

Written by: Ayman Ragab

The World Bank has affirmed that Nigeria's biggest financial challenge is weak revenue mobilization, not high debt, urging the government to prioritize revenue increases to support sustainable economic growth.

Matthew Verghese, the World Bank's Country Director for Nigeria, stated in an interview with Channels Television that Nigeria's debt level remains moderate by international standards and is significantly different from that of countries facing debt crises. He explained that the Bank's assessment indicates the core issue lies in low government revenue.

The debt-to-GDP ratio is lower than in many other countries.

Fergus added that Nigeria's debt-to-GDP ratio is lower than that of many similar countries, stressing that the focus should be on revenue improvement rather than borrowing limits. He pointed out that Nigeria enjoys a moderate level of debt compared to the size of its economy, nor is it in a similar position to Ghana, which is undergoing debt restructuring.

The World Bank official defended government borrowing, considering it a necessary tool to finance long-term investments that contribute to stimulating economic growth and improving citizens' living standards, explaining that annual financial resources alone are not sufficient to achieve tangible development results.

Connecting electricity to approximately 32 million Nigerians requires significant investment.

Fergus cited the electricity sector as an example, noting that providing electricity to around 32 million Nigerians requires significant investments funded through borrowing, adding that improving access to energy will boost economic activity and increase the country's future ability to repay loans.

On the other hand, a World Bank official warned that declining government revenues pose the greatest threat to Nigeria's fiscal sustainability, more so than the current debt level... APA reported.