The International Monetary Fund (IMF) has warned that Nigerian may spend nearly 100 per cent of its revenue on debt servicing by 2026.
The Bretton Wood institution raised concerns over Nigeria’s fiscal conditions, adding the nation spends 89 per cent of its revenue on debt.
The IMF’s Resident Representative for Nigeria, Ari Aisen, made this known in Abuja while presenting the fund’s latest Sub-Saharan Africa Regional Economic Outlook report.
IMF also warned that with fuel subsidy payments averaging N500 billion monthly, total expenditure on subsidy could hit a record N6 trillion by the end of the year.
“I think the biggest critical aspect for Nigeria is that we have done a macro-fiscal stress test, and what you observe is the interest payments as a share of revenue and as you see us in terms of the baseline from the federal government of Nigeria, the revenue, almost 100 percent, is projected by 2026 to be taken by debt service,” the IMF official said.
“So, the fiscal space or the amount of revenues that will be needed, and this, without considering any shock, is that most of the revenues of the federal government are now in fact 89 percent and it will continue, if nothing is done, to be taken by debt service.”
The IMF said that it is a reflection of the low revenue of the country, adding that it needs to mobilise more revenue to be able to have macroeconomic stability.
“It has become an existential issue for Nigeria,” Aisen warned.
The IMF official lamented that as an oil exporter, Nigeria is unable to take advantage of the current global high oil prices to build reserves. The nation is equally confronted by low earnings due to the subsidy on petroleum products, he said.