Amount Spent on Debt Servicing Injuring Economy – CISLAC
Civil Society Legislative Advocacy Centre (CISLAC) and Tax Justice and Governance Platform have decried the amount spent on debt servicing in the country, citing it as responsible for current economic challenges.
Addressing journalists in Abuja, Executive Director of CISLAC, Auwal Musa Rafsanjani, said debt service was allotted N8.25 trillion and that the President ambitiously projected debt servicing at 45 per cent of total income.
Stressing the need for the government to reduce its dependency on international, especially private creditor borrowings, Rafsanjani said borrowing accounted for about 60 per cent of the yearly debt servicing cost prioritising concessional loans, in adherence to legal stipulations.
He said the current economic situation in Nigeria, characterised by dwindling government revenues and escalating public debt, demanded immediate and strategic interventions.
He noted that as of December 2022, 80 per cent of Nigeria’s total revenue was dedicated to that purpose.
“The new government on its part has commended itself for allocating more funding to social services in its 2024 budget. However, the country will spend six times more on servicing debts than on building new schools and hospitals in 2024.
“In its N28 trillion 2024 budget, the pattern of bloated recurrent spending, new borrowings and unsustainable debt servicing costs still persist,’’ he said.
According to him, the government’s persistent reliance on borrowing and the loss of substantial revenue through tax expenditures have compounded the challenges.
In his remarks, Executive Director, Extractive 360, Juliet Ukanwosu, said the Ministry of Finance, Budget and National Planning, and related agencies should enhance revenue generation by expanding the tax net, improving tax compliance and revising tax incentives.
Ukanwosu said exploring revenue streams such as carbon taxes, in line with progressive taxation principles would augment government income.
She recommended: “Review all the existing tax expenditures and criteria for such benefit, including but not limited to Pioneer status, contribution to economy.
“Remove the power to grant tax expenditures from the Minister of Finance or the Executive and only place a duty on the executive to document the recommendations, proposals and justification for tax expenditure, subject to the approval of the legislature.”
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