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Reduce your appetite for borrowing, IMF urges FG

The International Monetary Fund (IMF) has called on the Federal Government of Nigeria (FGN) to reduce its debt.

It advised the Federal Government to focus on increasing the tax basket and compliance as a means of generating revenue to cut borrowing.Information Guide Nigeria

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According to BUSINESS HALLMARK, the fund in its latest Fiscal Monitor titled, ‘On the path to Policy Normalisation’, said that Nigeria’s debt is projected to continue to rise.

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IMF’s Division Chief, Fiscal Affairs Department, Paulo Medas: “In general, what we are saying about Nigeria is the need for a medium-term plan to reduce debt vulnerabilities over time and is because Nigeria has very low tax revenues.

“So, that makes it more vulnerable to these types of shocks and tightening global conditions.

“So, what we advocate is raising taxes, which is going to create space not only to manage debt but also to spend on other priorities.

“And the other part of what we say is that Nigeria has not benefited as much from the windfall of the oil prices in the past because a lot of it has been spent on these untargeted energy subsidies.”

As reported by BUSINESS HALLMARK, IMF also advised on target subsidy. “By shifting to more targeted subsidies, you can reduce the fiscal deficit, and you can use that resources on other priorities that actually can promote higher growth in the future such as education, and health, and reduce the deficit.NYSC Portal

“So having more targeted energy subsidies actually can be very beneficial both for fiscal, debt dynamics, and growth”.

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Speaking on tax reforms required, he said emphases should be on improving tax compliance and tax bracket, stating that Nigeria’s tax revenues are one of the lowest in the world.

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

“Many countries will need a tight fiscal stance to support the ongoing disinflation process, especially if high inflation proves more persistent.

“Tighter fiscal policy would allow central banks to increase interest rates by less than they otherwise would, which would help contain borrowing costs for governments and keep financial vulnerabilities in check”, Gaspar said.JAMB Result

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Idongesit Akpa-Ayang

Idongesit is a graduate of Communication Arts, University of Uyo. Currently working as a news reporter at InfoGuide Nigeria.

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