The International Monetary Fund (IMF) has warned that Nigeria’s fuel subsidy payments averaging N500 billion monthly of the country’s total expenditure, could hit a record N6 trillion by the end of the year.
The IMF’s Resident Representative for Nigeria, Ari Aisen, made this known recently while presenting the fund’s latest Sub-Saharan Africa Regional Economic Outlook report.
The international body also warned that the Nigerian government may spend nearly 100 percent of its revenue on debt servicing by 2026. It raised concerns over Nigeria’s fiscal conditions, adding the nation spends 89 percent of its revenue on debt.
“I think the biggest critical aspect for Nigeria is that we have done a macro-fiscal stress test, and what you observe is the interest payments as a share of revenue and as you see us in terms of the baseline from the federal government of Nigeria, the revenue, almost 100 percent, is projected by 2026 to be taken by debt service,” the IMF official said.
“So, the fiscal space or the amount of revenues that will be needed, and this, without considering any shock, is that most of the revenues of the federal government are now in fact 89 percent and it will continue, if nothing is done, to be taken by debt service.”
The IMF said that it is a reflection of the low revenue of the country, adding that it needs to mobilize more revenue to be able to have macroeconomic stability. “It has become an existential issue for Nigeria,” Aisen warned.