International Monetary Fund (IMF) on Thursday opened an agenda for the Nigeria’s new finance minister, Zainab Ahmed, recommending a policy tightening and increasing non-oil revenue
Christine Lagarde, managing director, IMF gave the recommendation at the ongoing IMF/World Bank Group annual meetings in Bali, Indonesia.
Lagarde was concerned that Nigeria’s domestic revenue mobilization at 5% of GDP is too low relative to addressing the issues of health, education, proper social spending on the people, and particularly the young people of Nigeria.
She also recommended structural reforms that would probably include really, making sure that the refineries and the oil equipment available in Nigeria works well and works for the benefit of Nigeria.
“I am delighted that Nigeria has appointed, yet again, a female Finance Minister, and I welcome the meeting that I will have with her. But if she was to ask me, what is our policy recommendation? I would certainly start with a tight monetary policy, higher non‑oil revenue mobilization”, Lagarde said.
Nigeria’s total revenue generation through taxation in the first half of the year rose to about N2.43 trillion,representing an increase in the revenue collection performance of N499.2 billion compared to the total collection of N1.94 trillion for the corresponding period last year. According to Federal Inland Revenue Service (FIRS
) Non-oil revenue amounted to about N838.58 billion, while receipts from oil taxes accounted for N1.60 trillion.
Responding to the issues of trade tension spilling over to the country, Lagarde said “In terms of spillovers, this is work that is constantly underway. It is to be found, if you will, in the Article IV that we produce under our bilateral surveillance. It is a tricky question because you have spillovers that are produced in very circumvoluted ways and not just a direct spillover. But we are doing this exercise on a country‑by‑country basis, very often taking scenarios and hypotheticals that either are proven true and hopefully will be proven wrong”.
Lagarde said the economy is not strong enough “because we clearly see that growth has plateaued if, three years in a row, it is at 3.7 percent”.
“So our strong recommendation is to de‑escalate those tensions and to work toward a global trade system that is stronger, that is fairer, and that is fit for purpose and fit for the future because if services are not sufficiently covered, if digital transformation is not covered in that trade framework, then we are missing the point, and we are probably losing out on the productivity gains that we could have”.
She said a safer global economy also means tackling the issue of sustainability, including the existential threat of climate change.
“And we know from work that was done last year—in particular, at the time of the World Economic Outlook—that low‑income countries and low‑lying countries are the first victims of such development. And we know from having heard from the U.N. IPCC (Intergovernmental Panel on Climate Change) that time is of the essence and that we cannot afford to waste it”.