IMF Calls on Nigeria to Increase Tax, Decrease Borrowing.

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The International Monetary Fund (IMF) has once again advised Nigeria to intensify efforts to expand the tax base, raise taxes, and lower the nation’s debt load. These ideas came up during the IMF/World Bank Spring Meetings, which are currently taking place in Washington, DC.

The IMF reaffirmed that Nigeria must gradually phase out its contentious gasoline subsidy and divert the money to targeted subsidies for important economic drivers like health and education. The suggestion was made in the most recent Fiscal Monitor from the IMF, headlined “On the path to Policy Normalization.”

“Nigeria should increase tax compliance and expand the tax base. Nigeria has one of the lowest tax receipts as a percentage of GDP in the entire globe. Therefore, there is ample room to raise the tax.

Meanwhile, in the Fiscal Monitor report, IMF noted that low-income developing countries had been hit by several shocks, including the COVID-19 pandemic and the cost-of-living and food security crises, which have taken their toll on public finances.

The report also said, “In some low-income developing countries, debt is projected to continue rising. Nigeria and some have asked for debt relief under the Group of Twenty (G20) Common Framework (Chad, Ethiopia, Ghana, Zambia.”

Director, Fiscal Affairs Department at IMF, Vitor Gaspar, speaking on the global perspective, noted that the near-term outlook was complex, amid high inflation, tightening financing conditions, and elevated debt. Gaspar urged policymakers to prioritise keeping fiscal policy consistent with central bank policies to promote price and financial stability.

Gaspar said, “Many countries will need a tight fiscal stance to support the on-going disinflation process, especially if high inflation proves more persistent.


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