Nigeria’s fiscal landscape has seen notable improvements, marked by a significant drop in debt service costs coupled with a sharp rise in non-oil revenue.
Finance Minister Wale Edun highlighted these encouraging trends in a recent review of the economy’s performance for the first half of the year.
The debt service ratio has dramatically decreased from a high 97% in June 2023 to a more sustainable 68% in 2024.
This reduction in debt servicing expenses has allowed for the reallocation of funds towards essential areas such as infrastructure, education, healthcare, and social services while also boosting the government’s reputation among investors and international financial bodies.
Additionally, Nigeria’s total debt, encompassing both domestic and international obligations, has been reduced. Notably, dollar-denominated debt has fallen from $181 million to $98 million.
Edun credited these improvements to timely payments to contractors and the government’s departure from the Ways and Means financing scheme.
On the revenue side, non-oil income has surged, exceeding last year’s figures by an impressive 30% and surpassing the budget targets for the first half of 2024. This growth underscores the government’s focus on diversifying revenue streams beyond oil and its commitment to tax reforms. The goal is to nearly double government revenue as a percentage of GDP from around 14-15% to roughly 25%.
The government has implemented enhanced revenue collection measures to support this growth, including technological advancements and streamlined processes within revenue-generating agencies. Despite a decline in oil revenue, which now makes up 30% of gross revenue compared to 11% in the same period last year, non-oil sources have more than compensated.
Minister Edun expressed satisfaction with the progress, noting the government’s data-driven approach as crucial for guiding the economy towards stability and growth.
