The International Monetary Fund (IMF) has called for deeper reforms to unleash Nigeria’s economic potentials.
The IMF made the call on Monday in its country focus article titled, ‘How Nigeria Can Unleash its Economic Potential.’
The IMF lamented that despite reforms of President Bola Tinubu government, inflation still exceeds 20 percent.
It noted that persistent poor infrastructure, especially electricity a inhibits economic activity.
It said poverty and food insecurity remain high while Nigeria lacks an effective social safety net to cushion the impact of shocks on the most vulnerable.
According to the lender, the global environment is posing new challenges with elevated uncertainty and high borrowing costs for the country.
To address the challenges, the IMF recommended more reforms.
It said, “The country needs stronger and more sustained growth to lift millions of people out of poverty and food insecurity, which is what the authorities are focusing on.
“As an essential ingredient for economic development, Nigeria needs an effective budget framework. Delivering effective investments in people and infrastructure requires realistic budget assumptions, strong expenditure management, and transparent implementation and reporting—which, in turn, can strengthen accountability.
“For its part, monetary policy should continue to decisively tackle inflation and reduce economic uncertainty.”
The IMF recommended that the government has to continue to increase domestic revenues.
It said, “This is essential given Nigeria’s substantial funding needs in growth-enabling areas such as agriculture, infrastructure, including access to electricity, and climate adaptation. The government’s tax reforms will make it easier to pay taxes and ensure that everyone who owes taxes pays them.
“Over time, once the ongoing cost-of-living crisis abates and the cash transfer system is fully operational, there will be room to align tax rates with those in neighboring countries.
“For now, the share of revenue that goes to interest spending leaves too little for investment in people and infrastructure. It is therefore critical that the substantial financial savings from the removal of fuel subsidies flow to the government to fund priority spending.”
