The International Monetary Fund (IMF) stated on Friday that for Nigeria’s policies of fuel subsidy removal and foreign exchange unification to contribute to economic growth and stability, the Federal Government must enhance tax collection to fund the national budget and settle public debts.
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Abebe Selassie, the IMF Africa Department Director, conveyed this stance during a press briefing on the Sub-Saharan Africa Regional Economic Outlook at the ongoing World Bank Group/International Monetary Fund Meeting in Marrakech, Morocco.
Selassie emphasized the importance of a comprehensive approach to reforms, asserting that measures such as exchange rate reforms and fuel subsidy removal would not be effective without complementary actions like tightening monetary policy and increasing tax revenues.
He highlighted the fiscal challenges faced by Nigeria, particularly the lack of tax revenues, and called for a holistic package of reforms to reinforce each other. Selassie acknowledged recent positive reforms but stressed the need for a coordinated effort to address interconnected issues.
Nigeria’s over-reliance on oil revenue, according to Selassie, has hindered its ability to tap into potential areas. He identified oil dependence, subsidy regimes, and the resulting inflation as interlinked challenges, contributing to the loss of government resources.
While acknowledging the new administration’s limited time in office, Selassie expressed hope that the government, including the recently appointed central bank governor and finance minister, would move in the right direction. The IMF stands ready to provide policy advice and support.
Additionally, the IMF supported the Central Bank of Nigeria’s decision to lift the forex ban on 43 items. Selassie praised the move, stating that such restrictions are generally ineffective in managing modern economies, and the CBN’s direction is a helpful one.
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