Nigeria is currently facing a serious revenue problem, the Director of Budget in the Ministry of Budget and National Planning, Ben Akabueze declared.
Akabueze also revealed that the Nigerian National Petroleum Corporation was subsidising every litre of Premium Motor Spirit, popularly called petrol, consumed in the country by N53.
He, however, referred to the sum as under-recovery, stressing that it was the term that the NNPC often called it.
He stated these while answering questions from participants at the Strategic Dialogues on the Morocco-Nigeria Relations in Abuja.
Akabueze said, “For us in Nigeria, lately there has been a lot of talk about government’s borrowings and those who talk about it are justified to express the concern. But the truth is that I think we are generally having the wrong discussion. I personally don’t think we have a debt problem, but we have a serious revenue problem, which, if we do not address, will snowball into a debt problem.
“But instead of having a discussion around the revenue issue, we are talking about the debt. Morocco, for instance, has a 63 per cent debt to GDP ratio; we have a 20 per cent debt to GDP ratio. Morocco has over 3.4 per cent deficit to the GDP ratio; we have a statutory cap of three per cent.”
He added, “The real issue is that in 2017, for instance, our debt service to revenue ratio crossed 60 per cent. There are two options of a policy standpoint in trying to address the numerator, which is debt, at a time when you have huge infrastructure deficit that needs to be addressed.
“And this is also at a time when the economy remains pretty fragile and, therefore, government spending is critical to sustain and drive growth. Therefore, focusing on the numerator in times like this may not be the solution. This is why revenue is what we need to focus on.”
Akabueze talked about oil price and stated that despite the rise in the cost of crude, there had been no corresponding growth in Nigeria’s revenue.
This, he said, was because the country was spending more to import virtually all the refined products from crude oil.
The budget director stated, “On oil price, for us it is a double-edged sword unfortunately. This ought to be a season where we should be clicking glasses with regards to the oil price. But right now, practically every drop of refined petroleum product that we consume in the country is imported.
“And the one single factor that determines the price of refined product is the price of crude. In essence, while we export the crude at about $80 per barrel, we effectively import back the same crude at about $100 importation price for refined products. And that explains why despite the strong oil prices, we are not seeing a corresponding growth in government revenue.”
On the amount being spent by the NNPC in subsidising PMS, Akabueze stated that the huge financial outlay had also dragged down the country’s revenue.
“Also at the moment, in terms of pricing of petroleum products, for every litre of petrol, there is a N53 under-recovery. Well, that is the term that the NNPC, which has this responsibility, calls it and so who am I? This represents a significant value for us. Hence, the need to diversify the economy remains urgent,” he added.