Post Views: 147 The International Monetary Fund, on Wednesday released its latest Article IV report for Nigeria, saying the country’s economy is growi...
The International Monetary Fund, on Wednesday released its latest Article IV report for Nigeria, saying the country’s economy is growing far below its potential to reduce poverty or joblessness.
While urging the Federal Government to boost revenue and scrap its system of multiple exchange rates, Amine Mati, the IMF’s mission chief for Nigeria, said in an interview in Lagos: “Growth is not enough.”
“Our number-one recommendation is to get the revenue ratio up.”
The economy is recovering from the 2014 crash in crude prices and the IMF forecasts that growth will accelerate to 2.1% this year from 1.9% in 2018, below the rate of population growth, at almost 3 percent.
Nigeria’s jobless rate was 23 percent in September 2018.
According to Bloomberg, Nigeria’s economy is growing at a slower rate than emerging markets as a whole, linked to the government’s small tax base, which hinders its ability to bolster demand through spending. Ratio of revenue to gross domestic product is one of lowest in the world and will fall to 7% in 2019 from 8% last year, the IMF said.
Increasing value-added tax from the current 5 percent could be a first step for the government, according to Mati.
As a way out, the IMF wants Nigeria to “urgently” implement structural reforms that will diversify its economy from oil. Besides boosting revenue, it is expected to ease restrictions on businesses buying foreign exchange, increasing fuel and electricity prices and making state-owned companies more efficient, the IMF said.
“Under current policies, the outlook remains muted,” the IMF report noted.
“Over the medium term, absent strong reforms, growth would hover around 2.5 percent, implying no per-capita growth as the economy faces limited increases in oil production and insufficient adjustment four years after the oil-price shock.”