Wale Edun, the Minister of Finance and Coordinating Minister of the Economy, has stated that the government of President Bola Ahmed Tinubu will prioritize using domestic resources above expanding the national debt load, despite mounting concerns about debt sustainability.
At the conclusion of the G24 Meeting, which was held in conjunction with the 2023 Annual Meetings of the World Bank and the International Monetary Fund (IMF) in Marrakech, Morocco, Edun announced the government’s intention to implement new reforms that will prioritize revenue generation through taxation, with a focus on tax collection.
Noting the issue of debt sustainability, he stated:
“Clearly, with interest rates going up around the world, there is the talk and there is the issue that debt servicing is taking a larger share than is feasible, than is practical that is warranted of resources in developing countries around the world.”
He stated that Nigeria is focusing on increasing the flow of non-debt funds rather than on borrowing, the emphasis will be on stimulating investment, both domestic and international. He added that measures to streamline and increase efficiency will be announced soon, bringing the issue of tax income and domestic resource mobilization together.
He noted that “the investments, opportunities, and scope for overall investment and corporate expansion are in underdeveloped countries. So, linking the two is critical, and in Nigeria, the emphasis would be on building an environment conducive to local and foreign investment.”
Furthermore, he said there is currently a lack of concessional finance, as well as an increase in interest rates, even among multilateral organizations. This situation is raising concerns about the probable impact of rising global interest rates on the escalating debt crisis and the significant finance gap for developing countries’ developmental demands.
“Basically, what we have now does not meet the expectations and requirements of developing countries like Nigeria. There is insufficient concessional finance, and interest rates are rising even inside international institutions. Because interest rates are so high around the world, the subject of debt is high on the agenda. And, of course, there is a budget gap; there is insufficient cash to meet the developing needs of the poorer countries,” he emphasized.
Nigeria, like other growing countries, must prioritize reforms centered on local resource mobilization rather than relying on foreign loans to fund budgetary spending. He explained that President Tinubu’s administration is aiming for inclusive changes that will spur the private sector’s growth. This means that there is the need to cut back on unnecessary spending and broaden the tax band. He emphasized that the government is taking steps to ensure tax collection efficiency.