Domestic Revenue Mobilization Research Articles

Міжнародні боргові метрики в контексті фінансування "зеленого" порядку денного

The article summarizes the public debt policy issues in the context of financing climate change measures, and suggests priorities and mechanisms of fiscal, debt and sectoral policies to ensure sufficient financing of the green agenda. Authors have emphasized the trilemma between achieving climate goals, maintaining fiscal sustainability, and ensuring political capacity. It has been found that even under favorable external financial conditions, climate-vulnerable countries face a constant premium to the cost of borrowing. As a result, developing countries with high levels of debt and climate vulnerability are caught in a vicious circle of growing investment needs for climate- sustainable structural transformation and significant dependence on increasingly expensive debt financing, which leads to a combination of deteriorating debt sustainability and insufficient funding for climate change challenges. Authors argue for a comprehensive multilateral policy aimed at reforming the international debt architecture and increasing the amount of available financing for climate change adaptation under a government-led framework. Achieving common goals requires a carefully calibrated combination of climate change mitigation instruments based on enhanced domestic revenue mobilization, in particular through carbon pricing, more efficient spending on transfers, green subsidies and investments, and regulatory measures. Authors propose a comprehensive approach to implementing climate change mitigation policies, including the implementation of a fiscal strategy, sectoral policies to prevent climate change, and stimulating private investment. Emphasized the importance of developing further tools for incorporating climate policy into debt sustainability analysis.

Administrative Reform to Strengthen Cooperative Tax Compliance in Cambodia: A Case Study in Domestic Revenue Mobilization

The focus of current study is to discuss the tax compliance structure and the role of administrative reforms in domestic revenue mobilization. There are several reasons why unresolved tax audits keep piling up with (particularly) large taxpayers, causing complaints. After the comprehensive review of existing tax structure, discussion on the existing infrastructure and based on empirical analysis, it is suggested that too much reliance on tax audit revenue, need for a more cooperative future relationship between GDT and large taxpayers, impartial express arbitration of tax disputes to clear the backlog and update the structure of the tax audit system. Lastly, taxpayers need (even3 ) more effectual education so they can comply faster and more accurately: Our research shows that delays at the taxpayer side are just as important, or even more so, than the delays observed at the GDT side. Even large taxpayers have difficulties understanding and preparing necessary documentation (26%) or are unclear about the correct application of laws and regulations (16%). Along the same lines, the GDT should consider to make the incentive for voluntary self-correcting of past tax returns permanent, at least to some degree.

An Examination of Constraints of Taxing the Informal Sector and the Impact on Revenue Mobilisation in Zambia

Taxation is a fundamental tool for revenue generation, economy building and sustainability, reducing market externalities, regulating trade, stimulating representation and achieving tax justice as well as building state accountability and responsiveness. The informal sector in developing countries generally and Zambia particularly has been considered a hindrance to effective domestic revenue mobilisation, hence the rejuvenated focus to bring the sector into the tax baskets. Through a critical literature review, this study sought to identify the varying motivations tabled by the various stakeholders (policy-makers, scholars and tax administrators) in literature on the need to administer tax on this sector and to strengthen enforcement and to evaluate the plausibility of these motives critically. A total of 34 journal articles extracted from Goggle scholar, Research gate, Semantic Scholar and JSTOR formed the literature review. The factors were aggregated into five major groups: political interference, high cost of collection, lack of formality and limited potential for revenue. This study, therefore, conducted a profound evaluative analysis of literature on these factors, pinpointing any voids that future research could address and accordingly sought to contribute to the guidance offered to policy-makers on how to improve informal sector. The study shows that political interference with frequency of 12 at 35%, followed by limited revenue potential with frequency of 9 at 26%, high cost of collection with frequency of 8 at 24% and lack of formality at frequency of 5 at 15% in that order.

New policies, new behaviors: How digital taxation shapes mobile money use in Ghana

AbstractThe transition from traditional to digital payment platforms is reshaping domestic revenue mobilization, with significant impacts on sectors like agriculture, health, business, education and economy. This transition, while presenting both challenges and opportunities, has the potential to foster economic growth and boost revenue mobilization. This paper investigates how digital taxation or electronic levy (e‐levy) has shaped mobile money (MoMo) adoption in Ghana since the introduction of e‐levy on digital financial transactions. The underlying theories supporting this study include the Technology Acceptance Model (TAM), Social Norm Theory (SNT), and Expectancy‐Confirmation Theory (ECT). A cross‐sectional design was employed, and data was collected from 206 participants (mobile network subscribers) through a self‐administered online survey conducted and applied a partial least square structural equation modeling technique. The findings indicate that inherent innovativeness, the structure of the tax, and social tax compliance norms significantly influence citizens' compliance attitudes towards e‐levy in the context of a developing country. Conversely, the study found that potential taxpayers' attitudes towards e‐levy do not determine their intention to pay (actual use) e‐levy. In this respect, recommendations to drive the digital taxation agenda among government revenue agencies in developing countries are (i) continuous inherent innovativeness on the part of the government, (ii) ensuring compliance attitudes towards e‐levy, (iii) proper structuring of the tax components and (iv) ensuring ease of use of the system. These findings provide governments and revenue agencies, particularly those in developing countries, with valuable insights into citizens' behavioral change towards digital taxation on MoMo transactions. An effective convergence of the determinants discussed in this research would expedite government mobilization efforts for electronic levies and promote development.

Revisiting the debt–growth nexus in sub-Saharan Africa: fresh evidence from panel nonlinear ARDL approach

PurposeWhile some countries have used debt to drive economic growth, the asymmetric effect on sub-Saharan African (SSA) countries has received little attention in the empirical literature. This paper therefore examines the asymmetric effect of external debts on economic growth.Design/methodology/approachThe panel nonlinear autoregressive distributed lag (NARDL) approach was employed in the study for 29 sub-Saharan African countries from 1990 to 2021. The cross-sectional dependence test was used to determine the presence of cross-sectional dependence, while the second-generation panel unit root tests was used to examine the unit-root properties.FindingsThe empirical results show that external debt has an asymmetric effect on economic growth in both the short and long run. In the long run, a positive shock in external debts of 1% triggers an upturn in economic growth by 0.216% while a negative shock triggers 0.354% decline in economic growth. This implies that the negative shock of external debts has a much stronger impact on economic growth than the positive shock. In the short run, a positive shock in external debts by 1% triggers a decline in economic growth by 0.641%, while a negative shock of 1% triggers a fall in economic growth of 0.170%.Originality/valueThe paper used the NARDL model to examine the asymmetric impact of external debt on the economic growth of SSA countries, which has not been extensively studied. It is recommended that governments in the selected countries in sub-Saharan Africa should drive economic growth by promoting domestic revenue mobilization since external debts impede economic growth.

The state and the legalisation of illicit financial flows: trading gold in Bolivia

ABSTRACT Most research on illicit financial flows (IFFs) has focused on illicit outflows from low-income countries and the role of non-state actors in generating IFFs. Less attention has been paid to processes through which IFFs enter formal value chains – in effect being legalised before leaving the country – or the crucial role of state institutions as gatekeepers. We develop a novel explanatory approach to account for the enabling role of state institutions in the legalisation of IFFs. Building on political settlement theory, we explain the performance of institutions in regulating IFFs as a function to maintain political power. Taking the case of Bolivia, we examine how legalising illicit value flows works in practice and analyse the motives and underlying conditions that lead state institutions to permit the formal export of gold shipments that have been illicitly sourced or transferred. We find that the legalisation of IFFs accommodates the interests of powerful cooperatives dominating the gold-mining sector, which are critical to maintaining the political settlement on which the incumbent government’s power is based. By maintaining a status quo of non-enforcement, legal ambiguity, and informality, gold-mining cooperatives reap higher benefits from resource extraction at the expense of domestic revenue mobilisation.

Manipulation of Transfer Pricing Rules by Multinational Enterprises in Developing Countries: The Challenges and Solutions

Domestic revenue mobilisation has become a topical issue in developing countries, and their capacity to regulate multinational enterprises (MNE) transactions to minimise Base Erosion and Profit Shifting (BEPS) remains a formidable task. Faced with legislative deficiencies, implementation incapacities, and being at the nascent stages of adopting transfer pricing (TP) regulation, developing countries have remained at the mercy of MNEs’ BEPS practices. The complexity and intricacies of intragroup transactions have an impact on profit allocation, thus affecting the distribution of taxing rights across countries where these MNEs operate. This study explores the regulatory policies toward international transfer pricing in the context of developing nations and the associated challenges. The paper proffers possible solutions to improve TP regulation and implementation. Specifically, the paper centres its attention on Zimbabwe, one of the developing nations that have implemented transfer pricing legislation in recent years. Mitigating the impact of BEPS through efforts, such as regulating and managing TP would avail potential substantial finance to shift developing countries from aid dependence to self-sustenance, yet these efforts face a lot of hurdles. Research that contributes to knowledge development in the area, evaluates the hurdles faced and contributes to policy and implementation improvements becomes vital. This study found that Zimbabwe is faced with challenges such as lack of legislative clarity, lack of comparability data, shortage of resources, lack of capacity and dysfunctional double taxation agreements in dealing with transfer pricing. The study recommends Zimbabwe should improve legislation, create TP databases, improve revenue authorities’ capacity, and increase stakeholder awareness of TP.

Government Assurances in Zambia: An Analysis of Implementation and Challenges

This paper provides a comprehensive analysis of the implementation of government assurances in Zambia, with a focus on the key sectors of finance, energy, water development, and education. Government assurances represent formal commitments made by government officials in response to parliamentary queries and serve as critical tools for ensuring accountability and transparency in governance. The study primarily examines the 2023 Action-Taken Report (ATR) presented to the National Assembly of Zambia, which details the progress made in fulfilling these assurances. Drawing on Public Accountability Theory, the paper explores how parliamentary oversight mechanisms influence the implementation of public policy, particularly in developing contexts. The research adopts a qualitative approach, utilizing secondary data from the ATR, supplemented by relevant academic literature and government publications. Thematic analysis was employed to identify patterns and recurring themes related to the implementation process, such as financial constraints, bureaucratic inefficiencies, and weak inter-ministerial coordination. Through this method, the study seeks to answer key research questions, including the extent to which government assurances have been implemented, the challenges hindering their execution, and potential strategies for improving the effectiveness of public policy in Zambia. The findings reveal that while progress has been made in some areas—such as the Zambia Growth Opportunities Programme and the Lusaka Sanitation Programme—significant barriers remain. Financial limitations due to Zambia’s debt burden, coupled with delays in international funding, have constrained the government’s ability to allocate sufficient resources for public projects. Additionally, bureaucratic inefficiencies, particularly in procurement processes and inter-ministerial coordination, have led to delays in project implementation, particularly in rural electrification and infrastructure development. In response to these challenges, the paper proposes several recommendations aimed at improving the implementation of government assurances. These include enhancing domestic revenue mobilization to reduce reliance on external funding, strengthening inter-ministerial coordination mechanisms, and reforming procurement processes to improve efficiency. Furthermore, the study highlights the importance of developing robust monitoring and evaluation (M&E) systems to ensure timely tracking of project progress and to improve public accountability. By contributing to the broader discourse on governance and public policy in Zambia, this paper offers valuable insights for policymakers, government officials, and scholars interested in improving the effectiveness of government assurances in developing contexts. It emphasizes the need for comprehensive public sector reform and suggests pathways to strengthen the capacity of government institutions to deliver on their promises, ultimately improving service delivery and fostering public trust in government institutions.

Pengaruh FDI Dan Kontribusi Sektor Jasa Terhadap Penerimaan Pajak Dengan Pemoderasi Kualitas Peraturan

According to several reports from the international monetary authority, countries belonging to Sub-Saharan Africa still maintain their tax ratio below the threshold of 15%. In fact, the structure of tax revenues in many of these countries has improved in several periods. The slow growth of domestic revenue mobilization, the increase in the debt-to-GDP ratio and the occurrence of a budget deficit are clear manifestations that the tax policy needs to be reformed. This study focuses on analyzing the relationship between Foreign Direct Investment (FDI), the contribution of the Service Sector and the ratio of tax revenues in 33 countries in Sub Saharan Africa during the 2002-2019 period. Through a quantitative approach, this study uses multiple linear regression methods on panel data with the Fixed Effect Model estimation. The research results strongly state that all dependent variables can be explained by the independent variable by 89.19%. As independent variables, FDI and the contribution of the service sector are moderated by the regulatory quality variable. The conclusion stated FDI has a significant positive effect on tax revenues. However, the contribution of the service sector has a negative coefficient values but does not have a significant effect on tax revenues. This study also uses government effectiveness and the industrial sector's contribution to GDP as control variables.

The Main Sources of Raising Domestic Revenue in Afghanistan

The governmental treasuries historically derived income from conventional sources available to administrations, augmented by extraordinary channels. Revenue emanated from taxation, administrative proceeds, public property income, and debt escalation—established conduits directing a segment of the national income to public authorities. This study retrospectively scrutinized the primary sources of Domestic Revenue Mobilization in Afghanistan, utilizing both primary and secondary data. Primary data was acquired from current Revenue Department employees at the Ministry of Finance (MoF), employing a survey research method through questionnaires. Secondary data, sourced from the World Bank, International Monetary Fund websites, journals, articles, and books, contributed to a comprehensive analysis. The findings indicated that Afghan government revenues historically emanated predominantly from customs duties on international movement of goods and services, and domestic taxation. Notably, natural resources, exemplified by foreign investments in copper mines, emerged as a pivotal revenue stream. It was essential to underscored that foreign assistance programs exhibited shortcomings in management, necessitating heightened supervision.

Determinants of the Tax Compliance and Fairness Perceptions of Taxpayers on the online Tax System. A Case of Ghana

In the face of the growing digital economy of Ghana, the Ghana revenue authority as part of its goal to increase domestic revenue mobilization has introduced an online tax system. The objective of the study is to determine the determinants of taxpayers’ perception of the fairness of the tax system and the determinants of their tax compliance. Data were collected using questionnaires from 380 respondents and analyzed using Microsoft Excel and Stata version 14. Results showed that there is a negative relationship between tax compliance and tax complexity. Educational level and income levels have a positive relationship with tax compliance. The people of Winneba generally have a poor perception of the fairness of the tax structure. Tax knowledge, compliance cost, and tax usage were significant determinants of the fairness perception of the people of Winneba. In this regard, the study recommends that policymakers should direct policy drafting to ease the resource cost the tax structure poses on the taxpayers, intensify tax education, and also further simplify the tax complexity

Мобілізація внутрішніх доходів держави в надзвичайних ситуаціях: протидія розмиванню податкової бази та виведенню прибутку з-під оподаткування

Introduction. Against the background of the post-covid recovery, destroyed by the strengthening phenomena of deglobalization, fragmentation, uncertainty, conflictogenicity, considerable efforts of the member states of the European Union (EU) are aimed at provision of increased financial resources for state needs through restriction of unfair tax practices. Problem Statement. Domestic Revenue Mobilization (DRM) directs the efforts of countries to increase their own incomes and resources of domestic economy by collecting taxes, duties and other revenues. The task must be completed without additional pressure on the business environment and does not aim to increase the tax burden on small and medium-sized enterprises that have been significantly negatively impacted by the COVID-19 epidemic, the main tools of impact should be focused on combating tax evasion by multinational companies and their beneficiaries and preventing tax base erosion in Ukraine in the post-pandemic and post-war recovery period. The purpose of the article is to substantiate the fact that for Ukraine, as a candidate for members of the EU, it is important not only to implement the experience of the EU member states in limiting the ability of multinational companies (MNCs) to apply hybrid instruments for tax base erosion using international structures, but also further systemic harmonization of domestic fiscal regulation in accordance with the best practices and modern rules for the prevention of profit shifting and base erosion (BEPS), which are constantly changing within the framework of supranational norms. Methods. The methods of system-structural analysis, retrospective analysis, analytical, systematization, comparative, dialectical and formal logic were used. Results. The crisis period of post-Covid recovery has become more complicated by the armed invasion of the Russian Federation on the territory of our country, which requires a search of internal revenue mobilization mechanisms to solve current state obligations, as well as for the formation of economic and epidemiological security of the state in the period of post-war recovery for the sake of preservation of socio-economic development and formation of reliable nation’s health care system. Conclusions. The introduction of reporting on controlled transactions, CIC, as well as tax payment by jurisdiction (Country by Country reports) is a progressive step in the direction of overcoming the asymmetry of tax information at the global level. For the effective implementation of all mentioned tools after the accession of the country to the Multilateral Agreement on Competent Authorities (MCAA CRS), it is necessary to focus efforts on the regulatory framework for the implementation of European directives, such as ATAD I and II, the implementation of the provisions of DAC7 for the control of digital activities and inclusion in the exchange information on income from intellectual property in the digital economy, as well as the formation of institutional conditions for the implementation of Pillar 1 and 2 at the national level.

Corruption and external debt nexus in sub-Saharan Africa: a panel quantile regression approach

PurposeDebt sustainability and the growing level of external debt in sub-Saharan African (SSA) continue to be significant research priorities. This study aims to examine the corruption-external debt nexus in SSA economies and whether different levels of corruption better explain this relationship.Design/methodology/approachThe panel quantile regression approach was applied to account for the heterogeneous effect of the exogenous variables on external debts. The research covers 30 years of panel data from 30 selected SSA economies for the period spanning from 2000 to 2021.FindingsThe empirical findings of the regression analysis demonstrate the heterogeneous influences of the exogenous variables on external debt. While there was a positive impact of foreign direct investment (FDI) inflows on external debts, corruption established a negative relationship with external debt from the 10th to the 80th quantile. The findings showed a positive link between trade openness and external debt, while they also showed a negative relationship between gross fixed capital formation and external debt.Research limitations/implicationsIt is implied that corruption “sands the wheels” of external debts in the selected SSA countries. Therefore, the amount of external debt that flows into SSA is inversely correlated with corruption activity.Originality/valueTo the best of the authors’ knowledge, this study is one of the first to use panel quantile regression to analyze how corruption affects debt dynamics across different levels of debt, allowing for a more nuanced understanding of how corruption affects debt dynamics. Based on the findings of this study, SSA countries should create enabling environments to attract FDI inflows and to continue to drive domestic revenue mobilization and capital so as to be less dependent on external debts.

Road Tolling and Domestic Revenue Mobilisation in Zimbabwe

The study analyses the effectiveness of road tolling-systems as an instrument for mobilising domestic revenue in Zimbabwe. The study assessed the effectiveness of road-tolling systems in mobilising revenue to recoup the costs of building, operating and maintaining road infrastructure. Revenue performance was rated using the internal and external dimensions of toll revenue, which revolve around activities such as toll revenue collection, administration (remittance) as well as the Zimbabwe National Road Administration’s (ZINARA’s) distribution and usage of the toll revenue. By way of mixed methods research design, the study conceptualised and contextualised the theory, models, technologies and practices of toll revenue collection in Zimbabwe. The study found that the Zimbabwean road tolling model as a hybrid conventional tolling model is a progressive, effective and reliable tool to raise revenue for constructing road infrastructure and related road-related capital investments in Zimbabwe and that the internal toll revenue performance is up-to-date with reduced toll revenue leakages and increased toll revenue yield. However, the study found that there is no meaningful investment on the road network and related highway infrastructure thus making the performance of external toll revenue questionable. The study recommended the strengthening of toll revenue collection, management, remittance and toll fees usage.

Elements of Internally Generated Revenue and Economic Growth in Lagos State

State governments in Nigeria need revenue to invest in social infrastructures and creating social safety nets to stimulate economic growth. One of the sources of revenue that state governments have direct control over to maximize domestic revenue is the internally generated revenue. Empirical evaluation of the relationship between internally generated revenue and economic growth, therefore, becomes imperative. Consequently, this study examined the relationship between the components of Internally Generated Revenue (IGR) and Economic Growth (GDP) in Lagos State. The research design is ex-post facto while the period of study was from 2012 to 2020. The data obtained on the dependent and explanatory variables from National Bureau of Statistics and Lagos State Bureau of Statistics was analysed with the Autoregressive Distributed Lag technique. The results show a long-run significant relationship for other taxes, direct assessment and road taxes with gross domestic product in Lagos state, leaving out pay as you earn with insignificant impact. In the short run, however, other taxes, direct assessment, pay as you earn and road taxes have positive and significant relationship with gross domestic product. The F-statistic of 824.42 with a probability value of 0.000 at 1 percent level suggests that internally generated revenue exerts significant influence on gross domestic product in Lagos State. The study concluded that internally generated revenue strengthened economic growth in the state. Lagos State government should sustain the current tempo of domestic revenue mobilization drive with special emphasis on pay as you earn as a component of internally generated revenue to spur economic growth.

Funding and Covid 19 Pandemic: Evidence from Selected Universities in Nigeria

COVID-19 pandemic has hit different countries with varying intensity, responding to the crisis has presented an unprecedented challenge to most governments in the world, both in scale and in the depth of impact on education. This paper examines funding and covid-19 pandemic of selected Universities in Nigeria. The study adopted survey research design; primary data was collected from academic staff of the selected Universities, using semi-structured five-point scale questionnaire. One -Way Anova (Multivariate test) was used to test for the effect of funding on covid’19 pandemic. Findings revealed that funding has significant effects on covid-19 pandemic in the Universities in Nigeria. The paper recommends that National authorities and the international community need to protect education financing, through strengthen domestic revenue mobilization; preserve the share of expenditure for education and address inefficiencies in education spending.

Measuring untapped revenue potential in developing countries: cross-country frontier and panel data analysis

Efforts supporting domestic revenue mobilisation in developing countries are often designed and evaluated based on empirical indicators, such as ratios of revenue to gross domestic product, which capture differences in achieved outcomes across countries. This article studies a complementary approach that also takes into account differences in countries’ fundamental economic structures associated with different capacities to raise revenue, which are not captured by simple ratios of revenue to gross domestic product. Non-parametric data envelopment analysis is applied to estimate domestic revenue potential in a panel of 118 low- and middle-income countries from 2008 to 2019. This approach provides a data-driven measure of how efficient each country is in raising domestic revenue given its national economic conditions. The results indicate that countries’ relative efficiencies do not exhibit the same strongly positive correlation with income levels as typically observed for ratios of revenue to gross domestic product. Instead, countries with low efficiency are spread across all income groups and geographical regions. This suggests that looking solely at ratios of revenue to gross domestic product might be misleading for drawing policy and normative conclusions about how much more revenue a country should aim to raise. Finally, panel regression analysis is used to investigate the extent to which international support is targeted at countries with larger untapped revenue potential.

Conceptualizing the fiscal state: implications for sub-Saharan Africa

Abstract This paper contributes to the debate on domestic revenue mobilization and state-building in the Global South by exploring the concept of fiscal states and the common assumption that such states are present in sub-Saharan Africa. We systematically review the diverse understandings of the fiscal state across relevant literatures to revisit its conceptualization. On that basis, we define the fiscal state as a state whose public revenue base is dominated by tax revenue and loans, and where the relationship between taxation and external and domestic borrowing is balanced and thereby sustainable and characterized by interdependence. We distinguish the fiscal state conceptually from the tax, debt, and rentier states and present a typology of these ideal state types, discussing illustrative empirical examples of different states in sub-Saharan Africa. These illustrate that not all sub-Saharan states can be categorized as fiscal states. This is important because when African states are regarded as fiscal states, assumptions are made about their economic structures; yet, to the extent that these are absent, fiscal policy reforms are unlikely to carry long-term positive effects.

Foreign Aid and Domestic Revenue Mobilisation in Conflict-Affected Countries

In recent years, there has been increasing interest in the impact of conflict on taxation, and a few articles have focused on aid effectiveness in conflict-affected countries. Although both aid and conflict have been identified as major determinants of tax performance, there is little agreement on the nature of their individual and joint effects on taxation. This study contributes to this debate by considering a sample of 123 developing countries over the period 1984 to 2014. Our findings show that aid granted during a period of conflict positively affects revenue collection, and this impact increases with technical assistance. A deeper analysis demonstrates a nonlinear relationship between aid provided during times of conflict and domestic revenue mobilisation. The institutional environment appears to be a factor that may mitigate, and even reverse, the nature of the relationship between aid and revenue mobilisation.

Effect of Debt Servicing on External Reserves in Nigeria

The management of Nigeria's external reserves, a key indicator of the nation's financial health and ability to withstand economic shocks, is at the centre of this economic investigation. This study investigates the effect of debt servicing on external reserves in Nigeria from the first quarter of 2010 to the first quarter of 2023. An ex post facto research design was adopted for the study. Quarterly time series data for external reserves, external debt servicing, and domestic debt servicing were collected from the Central Bank of Nigeria statistical bulletin and Debt Management Office reports. Philip Perron test was used to test the stationarity of the data and the ARDL test was utilized to determine the presence of a long-run relationship. The Fully Modified Ordinary Least Squares technique was used to test the effect of debt servicing on external reserves in Nigeria. The findings showed that external debt servicing and domestic debt servicing have a significant effect on external reserves in Nigeria. The study recommends that the Nigerian government through the Debt Management Office should emphasize diversification in acquiring external debts by engaging with multiple creditors, including multilateral institutions, bilateral partners, and global financial markets. Also, a strong emphasis should be placed on enhancing domestic revenue mobilization efforts. This can be achieved through fair and effective tax policies, reducing tax evasion, and promoting investments in sectors(like the finance sector)that yield sustainable revenue streams. Increased domestic revenue can alleviate the need for extensive domestic borrowing, thereby reducing the strain on external reserves for domestic debt servicing.