Experts proffer increased oil production to check debt servicing

Crude oil

FINANCIAL experts have urged the Federal Government to raise the country’s oil production quota and expand tax net to check rising debt profile and boost revenue.

They said this in separate interviews with the News Agency of Nigeria (NAN) on Monday in Lagos.

Mr Johnson Chukwu, the Chief Executive Officer, Cowry Asset Management, said the Federal Government could enhance revenue through raising oil production output.

“Raising the oil quota to the pre-COVID 19 era when production rose to over two million barrels per day is the way to go.

“This will change the fiscal revenue positions and reduce the associated headwinds with rising debt servicing,” Chukwu said.

He added that the Federal Government could also tackle the country’s shrinking revenues by expanding its economic base.

“Total deregulation of the petroleum sector will open up the domestic economy for more foreign direct investment.

“New business will begin to spring up and its various value chain, and the government could be able to make revenues from taxes and mitigate the risk with rising debt,” he said.

Also speaking, Mr Sunny Nwosu, the founder of the Independent Shareholders Association of Nigeria, said the Federal Government could reduce the impact of rising debt payment by expanding the tax net.

“Using more of empirical processes to incorporate people into the tax net is possible, as it will automatically boost government earnings,” Nwosu said.

This, he said, had become imperative particularly now that the fiscal position is challenged due to competing demand in the economy.

Nwosu noted that the three tiers of government should reduce cost of governance to free funds for adequate debt payment.

“Reducing the cost of governance is key to reflect the tough times that the country is contending with, especially now that the country needs funds to address developmental issues in the economy,” he said.

Mr Godwin Anono, the President Standard Shareholders Association of Nigeria, said the Federal Government need to stop all financial leakages in its ranks.

“All government ministries, department and agencies saddled with generating money should block all the loopholes so as to boost earnings.

“Enforcing this suggestion will improve government revenues and ameliorate the impact of the rising percentages for debt,” he said.

NAN reports that the Director-General, Debt Management Office (DMO), Ms Patience Oniha, said that there is the likelihood of debt services becoming higher by the end of the year.

Oniha attributed this to the low revenues earned by the country.

She said this while appearing before the House of Representatives Committee on Debt and Loans to defend the 2023 budget of the DMO.

Oniha said that the government has indulged in a measure called ‘ways and means’ where the federal government borrows money from the Central Bank of Nigeria directly.

She said that the international market has closed its doors of borrowing making it difficult for the country to borrow.

Oniha, however, said that measures were provided in the 2023 budget to service the loans, stressing that Nigeria had not defaulted so far. (NAN)