Nigeria’s economic strategy to mitigate debt service risk, says finance minister

Kemi Adeosun, Nigeria’s minister of finance said Friday that the country’s revenue and debt management strategy would mitigate the country’s debt service risk and fast-track development.

In a statement made available in Lagos, according to Xinhua, the minister said Nigeria’s economic hub on Friday welcomed the advice of the International Monetary Fund in regards to the country’s decision to take more foreign loans.

Nigeria’s further borrowings from foreign partners would help mobilize revenue, whilst reducing the nation’s debt burden by lengthening the maturity profile, she said.

The minister added that foreign borrowings would also increase foreign exchange reserves, reduce crowding-out of the private sector and create savings in debt service cost.

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Adeosun, in addition,  said a key element of the government’s economic reform strategy was the mobilization of revenue to improve the ratio of debt service to revenue.

According to her, this was being undertaken through a number of initiatives including the plugging of leakages and the deployment of technology in revenue management.

She cited the example of the Health Pay, a pilot cashless revenue project in the health sector which had recorded increase in revenue.

The minister said the ongoing Voluntary Assets and Income Declaration Scheme (VAIDS) was equally expected to impact positively on the level of tax collections.

Adeosun said the government was refinancing its inherited debt portfolio and this would lead to significant benefits, particularly a reduction in costs of funds.

The government, according to Adeosun, does not see a significant devaluation risk as the implementation of the Economic Recovery Growth Plans (ERGP) would strengthen the naira.