Debt service pressure to persist in 2022, says report

The Economic Review for 2021 and Agenda for 2022 report of the Centre for the Promotion of Private Enterprise [CPPE] 2022, has stated that pressure from debt service is expected to persist in 2022 and beyond.

The report signed by the centre’s Chief Executive Officer, Dr Muda Yusuf, stated that debt service pressure is a significant downside risk of investing in Nigeria.

The group also appealed to the finance minister to review the recent provisions to Tax Appeal Tribunals.

The report stated that an unpredictable revenue outlook elevates the risk of a higher fiscal deficit than projected, maintaining that the debt service pressures would be seen in 2022 and beyond.

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The report said, “The pressure of debt service on government finances will persist in 2022 and beyond. Total public debt as of 30th September 2021 was N38 trillion or $92.6 billion, according to the Debt Management office.  The 2022 Budget provided for the sum of 3.88 trillion Naira as debt service. This is a substantial amount when compared with the capital budget provision of N5.46 trillion.”

The report added that “Debt service payment is typically the first-line charge in budget releases. The ambitious budget size of 17.1 trillion Naira and the unpredictable revenue outlook elevate the risk of a higher fiscal deficit than projected.  This has implications for macroeconomic outcomes of high fiscal deficits, a new round of monetisation of the deficit, pressures on the exchange rate and the general price level.”

CPPE also appealed to Nigeria’s fiscal policies, particularly the recent provisions to Tax Appeal Tribunals rules.

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The report said “The CPPE would like to appeal to the finance minister to review the recent provisions to Tax Appeal Tribunal rules compelling those who have tax disputes to pay 50% of the amount in dispute before their appeal can be heard. We submit that this is contrary to the principle of natural justice, it constitutes an obstruction to a fair hearing. We, therefore, call on the finance minister to review this policy urgently.”

“Besides, the rule is in conflict with the FIRS Establishment Act that set up the tribunal. We, therefore, request that this rule be expunged from the proceedings of the tax appeal tribunals in the interest of fair hearing,” the report added.