The Minister of Finance, Zainab Ahmed has blamed Nigeria’s high debt service to revenue ratio on the country’s large expenditure base.
She said this during an interview with Bloomberg TV on Friday, noting that a large proportion of Nigeria’s budget caters to payroll.
She said, “Our debt service to overall revenue is high because we have a very large expenditure base. We have a large proportion of our budget dedicated to payroll, and Mr President had decided from the beginning of his administration that we were not going to disengage staff.
“So, you have to pay salaries, you have to pay pensions. And also, we have to fund the other arms of government, which are the judiciary and the legislature.”
However, Ahmed expressed hope in oil prices stating that the current rise would help the country earn more revenue from the sale to other countries.
She also noted that buying back petroleum products from other countries due to moribund refineries dents the revenue Nigeria earns.
She said, “The high price of oil means that we would be able to earn more revenue. At $85 per barrel is way above the $40 per barrel we have on our 2021 fiscal projections.”
“But we also have the challenge of having to buy petroleum products for use in-country, because we do not have functional refineries. So that eats into the revenues we would have otherwise realised.”