IMF Urges Nigeria to Enhance Tax Collection Efficiency to Expand Revenue Base
The International Monetary Fund (IMF) has recommended that the Nigerian government implement a more effective tax collection system to widen its revenue base. This guidance was provided by Mr. Davide Furceri, Division Chief of the IMF’s Fiscal Affairs Department, during a press briefing on the Fiscal Monitor at the ongoing IMF/World Bank Annual Meetings in Washington, D.C.
Furceri highlighted Nigeria’s high debt service-to-revenue ratio as a pressing concern, asserting that it significantly limits the resources available for investment in essential programs and projects aimed at boosting socio-economic growth. Although Nigeria’s debt service-to-GDP ratio has improved from nearly 100 percent in the recent past to around 60 percent, he emphasizes the need for policymakers to concentrate on enhancing revenue generation to further decrease the percentage of revenue allocated to servicing debt.
He stated, “It is crucial to increase the revenue-to-GDP ratio. In Nigeria, a debt service-to-revenue ratio of approximately 60 percent indicates that a substantial portion of the country’s revenue is spent on debt servicing. We recommend that nations like Nigeria enhance their revenue mobilization efforts, which will help lessen the share of revenue dedicated to paying off debt.”
Furceri underscored the importance of broadening the tax base as a means to generate additional revenue and stressed the need for Nigeria to establish a transparent and efficient tax system to improve revenue collection efforts.
Meanwhile, the federal government has reported that Nigeria’s current debt service-to-revenue ratio stands at 68 percent, a decline from the 97 percent inherited by the administration.
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