IMF ADVISES NIGERIA TO INCREASE INTERNAL REVENUE, USE GLOBAL RISING OIL PRICES TO REDUCE DEBT
IMF ADVISES NIGERIA TO INCREASE INTERNAL REVENUE, USE GLOBAL RISING OIL PRICES TO REDUCE DEBT
The International Monetary Fund (IMF) has advised Nigerian government to step up efforts on domestic revenue mobilization and capacity building to respond to the challenges posed by global economic shocks.
The Division Chief, Fiscal Affairs Department of IMF, Mr Paulo Medas, said this on wednesday in Washington at fiscal monitor press conference titled “helping people bounce back”
He pointed out that Nigeria’s revenue generation is extremely low and puts the government in a difficult situation in provision of basic services and response to global challenges.
While he noted that high inflation, revenue challenges and debt can be result of unexpected circumstances in any clime, he stressed that African countries need to set priorities right and reduce waste through harnessing resources into more serious urgent needs.
He said that there is no any improvement in Nigeria’s deficit due to petrol subsidy payments urging countries like Nigeria, especially those oil exporting countries to
take advantage of the rising prices of crude oil in the global market to save funds to reduce the country’s debt.
“In Nigeria, which has benefited from higher oil revenues, we haven’t seen an improvement in the part of the deficit because of the margins with subsidies and also other issues with the production of oil and pressures on the budget. So our recommendation is to try to save some of these oil revenues and address emergency needs”.
“Another aspect, I would say, Nigeria’s case was where tax revenues are really low. And this really undermines the capacity of the government to react to shocks and provide key services. You need to increase the states’ capacity to address the needs of the country and these will also help make fiscal policy more consistent to ensure economic stability”.
He also said that Africa already, before the pandemic, had a very low-level tax-to-gross domestic product ratio which deteriorated and made it much harder for governments to respond to crises, manage and deliver basic services, education, health and infrastructure.
“improving the quality of spending and reducing waste is in different areas. For example, some countries cut on some state-owned enterprises, with government budgets and economy and most importantly, the need to improve social safety nets. All these will help the government start with those in need while reducing inefficient and wasteful subsidies”. He explained.
“So all these key priorities for governments to do, but it’s not going to be enough in areas where countries face food insecurity and others. Many governments are facing double-digit inflation. And in this respect, fiscal policy needs to help monetary policy and work together to ensure price stability, it is absolutely critical for stable growth”.
