Nigeria spends nearly five times more of its revenue servicing external debts than on healthcare and education combined, a new report by ActionAid International and ActionAid Nigeria has revealed.
The report, released on Tuesday, accused the International Monetary Fund, IMF, of promoting policies that have weakened social spending and worsened economic hardship in the country.
According to the report titled “Still Cooking with a Failed Recipe: A Review of IMF Country Advice on Social Spending, Public Services, Debt, Tax and Gender Equality,” Nigeria allocates 20.1 percent of its national revenue to external debt servicing, compared to 4.06 percent for health and 4.40 percent for education.
ActionAid noted that debt repayment has become a major obstacle to increased investment in public services across many lower-income countries, including Nigeria.
The organisation further alleged that IMF policy advice failed to adequately consider the impact of rising debt obligations on spending for critical sectors such as health and education.
On fuel subsidy removal, the report said the IMF recommended the policy but later acknowledged that measures introduced to cushion its impact on poor Nigerians were inadequate.
“The IMF recommended in ArtIV24 that Nigeria remove its fuel subsidy,” the report stated, adding that “adequate compensatory measures for the poor were not scaled up in a timely manner.”
The report also disclosed that the IMF advised Nigeria to increase its Value Added Tax, VAT, from 7.5 percent to 15 percent by 2026 and recommended higher excise duties on tobacco and alcohol.
ActionAid argued that such measures would place a heavier burden on low-income households without corresponding tax increases on wealthy individuals.
Speaking on the report, ActionAid Nigeria Country Director, Andrew Mamedu, accused the IMF of applying double standards in its recommendations.
“For six years running, the IMF has looked at a wage bill that funds Nigeria’s teachers, nurses and doctors at less than a quarter of the regional average and found nothing to recommend beyond keeping it frozen.
“Meanwhile, ordinary Nigerians are being asked to absorb a doubling of VAT and the lingering effects of a poorly cushioned subsidy removal. This is not the advice of an institution that has reformed. It is the same recipe, repackaged,” he said.
The report concluded that the IMF remains heavily involved in managing debt crises globally and called for a fundamental rethink of its policy approach towards developing countries.
