Abraham Nwankwo, Director General of Nigeria’s Debt Management Office

The Debt Management Office (DMO) on Tuesday said that all monies to be borrowed to finance the 2016 budget deficit would be used strictly for funding capital projects.

Dr Abraham Nwankwo, the DMO Director-General, said this at a one-day workshop on “Public Debt and the Challenge of Financing Nigeria’s Economic Recovery” organised for Capital Market Correspondents Association of Nigeria (CAMCAN) in Lagos.

He said that the DMO was committed to ensuring proper funding of the 2016 budget deficit from appropriate sources and through appropriate mix to make sure that capital projects were well funded.

Nwankwo said that the nation’s debt profile was sustainable, noting that the nation still had a lot of potential which the administration was currently working to harness for effective growth.

He said that the budget deficit would be funded both locally and externally as stated in the budget.

Nwankwo said that DMO would look at the right debt mix, noting that the deficit could be sourced from the World Bank, Africa Development Bank and the Nigeria Export-Import Bank.

He expressed dissatisfaction with the country’s low tax revenue to Gross Domestic Product (GDP) ratio currently at less than seven per cent.

Nwankwo stressed the need for effective tax administration in the country, while calling for tax compliance to achieve comparative tax revenue to GDP ratio of 18 per cent being recorded by other developing countries.

Nwankwo said that the average comparative tax revenue to GDP ratio in industrialised countries stood at 27 per cent as at Dec. 31, 2015.

According to him, debt sustainability and overall economic sustainability can be influenced by individuals’ and corporate bodies’ compliance with tax payment.

“There must be effective tax administration compliance in running the economy.

“All over the world, government depends optimal on taxation to run the economy, going by the population,” he said.

Nwankwo said that Nigeria should not find it difficult servicing huge projects if people paid their taxes voluntarily.

Nwankwo said that sustained progress in the ongoing initiatives by the Federal Inland Revenue Service (FIRS) would boost tax compliance in the country.

Nwankwo said that the nation’s economic recession was caused mainly by unfavourable structural change in the global market for oil prices globally.

He said the Nigerian government was addressing the challenge through diversified, self-sustaining growth in agriculture and agro processing, solid minerals, manufacturing and ICT.

“That is what the government is doing in agriculture, solid minerals, ICT and manufacturing.

“To do that we need a strong infrastructure base and that is why government is spending what is borrowing on capital projects,” Nwankwo said. (