The Country Director for Nigeria, World Bank, Shubham Chaudhuri, has urged the Nigerian government to increase its revenue base to address its rising debt profile.
He observed that Nigeria, like other countries, needs to borrow to finance its expenditures, adding that how the government uses its loan will determine whether borrowing has been a good or bad decision.
Speaking during an interview with PUNCH, he said, “Most countries at some point in their histories, especially as they are developing and even once they are developed, borrow to finance the everyday workings of the government and for investing in the future. From a global cross-country perspective, Nigeria has actually in some ways an exceptional case because the overall level of public debt that the Nigerian government has accumulated is not that high relative to the size of its economy, compared to many other countries.
“On the other hand, Nigeria’s revenue base to service the debt is very low. While the overall debt to the size of the economy is not high, the debt service relative to the government’s revenue is very high. It is a situation where we won’t say this is a country that is in debt distress yet. However, Nigeria has to do more to increase its revenue base.
“Whether or not borrowing is a wise decision depends on how that debt is used. In the case of Nigeria, there is certainly a need for financing. Nigeria needs to invest in infrastructure and human capital.”
