DMO Urges Govt to Cut Borrowing, Boost Revenue Amid Rising Debt

The Debt Management Office (DMO) has urged the federal hovernment to reduce new borrowings, strengthen revenue mobilisation and explore public-private partnerships to finance capital projects as rising debt servicing threatens to constrain the country’s fiscal space.

The DMO is responsible for managing the country’s public debt, advising the government on borrowing and raising funds through the issuance of debt instruments, while ensuring sustainable debt management.

In its 2024 Debt Sustainability Analysis report which it just released, the DMO warned that Nigeria’s debt service-to-revenue ratio could rise to 71.7 per cent by 2030 under the baseline scenario, exceeding the 50 per cent limit adopted in the assessment.

Under a more adverse economic scenario, the ratio could climb to 97.3 per cent by 2030, further reducing funds available for other government obligations.

To address the challenge, the DMO recommended increasing government revenue through tax reforms, expanding the tax base, improving compliance and deploying technology to strengthen tax administration.

It also called for greater efficiency in public expenditure, urging the government to direct resources towards growth-enhancing investments capable of expanding the economy and generating additional revenue.

The debt office further advised the government to reduce new borrowing by adopting public-private partnership arrangements to finance capital projects and complying with the Fiscal Responsibility Act and provisions of the CBN Act on Ways and Means Advances.

It also recommended the privatisation or sale of government assets and greater reliance on concessional financing when available. The DMO said sustaining the removal of petrol subsidy and the adoption of a unified and flexible exchange rate regime would remain important to improving government revenue.

It warned that Nigeria’s debt sustainability, although moderate, remained highly vulnerable to weak revenue mobilisation, exchange rate depreciation and global uncertainties.