Mr. Auwal Ibrahim Rafsanjani, the Executive Director of the Civil Society Legislative Advocacy Centre, CISLAC, emphasized the need for urgent action to address tax expenditure and debt management challenges to curb revenue losses in Nigeria.
This call was made during a media presentation titled “Addressing Nigeria’s Fiscal Challenges: A Comprehensive Approach,” held in Lagos on Wednesday.
Abdallah Sambo, an official of the CSO, released the statement in Abuja, highlighting Rafsanjani’s concern over Nigeria’s current fiscal crisis characterized by a consistent decline in Federal Government revenue over the past five years.
“Central to this concern is the government’s overreliance on unsustainable debts which is perpetuated by unrealistic over bloated budgets, weak revenue mobilization efforts, misplaced spending priorities and a lack of transparency and accountability in public finance management.
“This alarming trend is evidenced by substantial shortfalls in revenue, with deficits ranging from 31% to as high as 50% in the years spanning 2018 to 2023.
“Concurrently, Nigeria’s overall debt burden has skyrocketed, reaching a staggering N97.34 trillion in the fourth quarter of 2023 from N87.9 trillion ($114.3 billion) as of June 2023,” he said.
He said while Nigeria’s debt profile continues to grow, and it allocates most of its budget revenue to debt servicing at the expense of investing in more critical social sectors and infrastructural development, there has been a wide consensus around the reasonability/sincerity of purpose behind external borrowings.
He recalled that in November 2023, the government signed a $2.8 billion supplementary budget that included funding for new bulletproof cars for the President and First Lady, a Presidential Yacht, and renovations of the President’s residential quarters amid a nation-wide cost-of-living crisis.
He added that “this coincided with a presidential request to the Senate for the approval of an external loan facility of $7.86 billion and 100 million euros, among others.”
CISLAC boss lamented over the lack of accountability mechanism in utilisation of loans for the purpose for which they were granted/taken.
“The 2020 annual audit report published by the Auditor-General of the Federation revealed there was no document to show the movement and spending of the $3.4 billion COVID-19 emergency financing package loaned to Nigeria in April 2020 by the International Monetary Fund (IMF)
“Compounding Nigeria’s fiscal woes are significant revenue losses attributed to tax expenditures, encompassing incentives, exemptions, credits, and waivers.
“According to the 2021 Tax Expenditure Statement (TES), revenue foregone due to tax expenditures accounted for approximately 4% of GDP, equating to N6.8 trillion.
“This substantial leakage of revenue underscores the urgency of addressing tax expenditure and debt management issues with utmost priority,” he said.
Rafsanjani said that there must be sincere demonstrations in the government’s commitment to addressing Nigeria’s pressing fiscal challenges, encompassing tax expenditure, debt management, revenue mobilisation, and the prioritisation of spending.
“By harnessing the collective expertise and insights of all relevant stakeholders, we are confident that we will navigate the complexities of Nigeria’s fiscal landscape and chart a course towards sustainable economic growth and development with transparency, accountability, and fiscal prudence as guiding principles,” he concluded.
