· Improve revenue, expenditure efficiency, government charged
Despite Nigeria’s aggressive revenue mobilization, the International Monetary Fund (IMF) said the country’s revenue-to-output ratio could dip to 9.2 per cent in the next five years.
The country finished last year at a 10.8 per cent revenue-to-gross domestic product (GDP) ratio. The ratio is expected to fall by over a percentage point to 9.6 per cent this year and further slow to 9.1 per cent in 2026.
These are contained in the Fiscal Monitor report, a document benchmarking countries’ fiscal performances relative to others, released yesterday at the ongoing World Bank/IMF yearly meetings being held in Washington, DC.
In 2030, sub-Saharan Africa (SSA) is expected to earn 15.8 per cent of their GDP as revenue on average, a figure that is significantly higher than that of Nigeria, highlighting the country’s poor revenue mobilisation.
Last year, the SSA’s revenue to GDP ratio was 14.8 per cent while that of oil-producing countries was 10.9 per cent. Oil-producing countries’ revenue to GDP ratio is expected to fall to 10.3 per cent on average in 2030, a little above the projected ratio for Nigeria.
The country’s tax reform, which is hailed by different stakeholders at the meetings, is touted as a game-changer in the effort to remarkably increase its revenue.
Yet, in the IMF projection, it will not significantly raise the revenue mobilisation in the near term in relation to the size of the economy, which has increased to over N372 trillion.
The report also projected the Nigerian government’s general expenditure in relation to output level to swing between 12.3 and 12.5 per cent from 2025 to 2030. This is lower than both the SSA and oil-producing countries’ averages of 18.2 per cent and 13.5 per cent, respectively, in 2030.
The revenue-to-GDP ratio projection gives a picture of Nigeria’s weak prospect of spending its way out of the current infrastructural deficit, estimated at $3 trillion yearly by Moody’s some years back.
On the positive side, the IMF sees the country’s gross debt to GDP ratio slowing down to 33.8 per cent by 2030, from last year’s 39.3 per cent. This is much lower than SSA’s, which is expected to average out at 43.9 per cent in 2030. That of oil-producing countries is to slow to 35.4 per cent in five years from its current 43.5 per cent.
Netted out, Nigeria’s debt-to-output ratio, the report said, will be 33.7 per cent in 2030, which is insignificantly lower than the gross ratio.
At a press conference unveiling the report, Deputy Division Chief of the Development Macroeconomic Division at the IMF, Davide Furceri, said there is a consistency in monetary policies to reduce inflation and noted that the IMF’s recommendation for the country reflects both revenue and expenditure reforms.
“I think on the revenue side, there is scope to improve revenue through reform of the tax administration, to increase revenue mobilisation. On the spending side, there is scope to, on the one hand, improve the efficiency of the spending itself,” he noted.
