Nigeria not generating enough revenue to support devt – IMF

Nigeria is not earning enough revenue to support its developmental needs, the International Monetary Fund has disclosed.

According to the IMF, the country’s nine per cent revenue to Gross Domestic Product ratio is very low and not enough to support the country’s social safety nets, development spending, and protect its vulnerable households.

The Director of the IMF’s Communications Department, Julie Kozak, revealed this during a press briefing on Thirsday.

Responding to a question on Nigeria at the briefing, she said, “As we mentioned in our Article IV Consultation, which was held in February of 2023, raising revenue from the very current low revenue to GDP ratio of nine per cent is essential to create fiscal space for social and development spending.

“Nine per cent of GDP is a very low revenue to GDP ratio, and it is really not high enough to be able to support strong social safety nets, and development spending, to help protect vulnerable households and also to meet Nigeria’s development needs.”

She, however, noted that Nigeria’s 2024 budget hopes to prioritise priority spending, both on the social and development side.

She stated, “The 2024 budget aims to reduce the fiscal deficit while also creating space for these priority spendings, both on the social side and also on the development side.”

Low revenue has become a concerning in Nigeria, with the Federal Government recently moving to improve its revenue to GDP ratio.

During the 2024 budget presentation, the Minister of Budget and Economic Planning, Abubakar Bagudu, said, “Revenue generation remains the major fiscal constraint to Nigeria’s fiscal viability. However, government is reviewing current tax and fiscal policies with a view to improving revenue generation.

“The target is to increase the ratio of revenue to GDP from less than 10 percent currently to 18 percent within the current term of this Administration. Efforts will however focus on improving tax administration and collection efficiency.”