Presidential candidate of the Labour Party, Peter Obi, said the Federal Government is spending beyond its revenue, with tax contributions falling below Africa’s average ratio.
As a result, Nigeria’s debt servicing has increased, with World Bank, in a report by Ripples Nigeria on Wednesday, expressing concern for the nation and other developing countries.
Obi stated that if elected President come February 2023, he will implement radical economic policies that will drastically reduce Nigeria’s debt-servicing ratio and debt to revenue ratio.
The former chairman of Fidelity Bank disclosed his intention in the 72-page manifesto detailing his plans for his administration if elected next year.
He said 116 per cent of government revenue is disbursed on debt servicing, indicating Nigerian government spends 116 kobo out of every 100 kobo generated as revenue.
According to Obi, Nigeria’s revenue was affected by low tax collection, which contributes only about 6 per cent to its GDP, well below the African average of 17 per cent.
The presidential hopeful said, “We will implement radical economic policies that will drastically reduce our debt-servicing ratio and debt to revenue ratio.
“Such a policy action is imperative since we are aware that presently (as of April, 2022), Nigeria has about 95 million people living below the poverty line; unemployment rate hovers around 32% with the youth component at about 53.4%; and tax contributes only about 6% to our GDP, well below the African average of 17%.
“Our national situation is made worse given that 116% of government revenue is now devoted to debt servicing. This means that 116 kobo out of every Naira (100 kobo) collected by government goes toward servicing of the country’s debt (which means the additional 16 kobo is borrowed to service debt).”
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