Days of sharing oil rev­enue over for Nigeria – IMF boss

Ms Christine Lagarde has told the National Assembly that the days of sharing oil rev­enue were over. She tasked lawmakers and the Executive arm of government to take hard decisions to deliv­er Nigeria from the present economic recession.

The IMF boss, who engaged the NASS leadership on the way forward for the country, said that the fuel subsidy scheme was no longer relevant because the rich had hijacked it.

Lagarde advised the govern­ment to jack up the current five percent Value Added Tax (VAT) and curb leakages in the pub­lic sector to raise more funds to provide services for the ordi­nary Nigerians.

She lamented that Nigeria was spending 35kobo of eve­ry naira it earned to service its huge debt.
The IMF MD, who met with President Muhammadu Buha­ri on Tuesday, told the Senate President Bukola Saraki that in considering this year’s budget, the Federal Government must take hard decisions on reve­nue, expenditure, debt and in­vestment.

She said: “I see an imme­diate priority – a fundamen­tal change in the way govern­ment operates. What do I mean by that? The new reality of low oil prices and low oil revenues means that the fiscal challenge facing government is no long­er about how to divide the pro­ceeds of Nigeria’s oil wealth, but what needs to be done so that Nigeria can deliver to its peo­ple the public services they de­serve – be it in education, health or infrastructure”.

“This means that hard deci­sions will need to be taken on revenue, expenditure, debt, and investment going forward. My policy refrain is this:
“Act with resolve- by step­ping up revenue mobilisation. The first step is to broaden the tax base and reduce leakages by improving compliance and en­hancing collection efficiency. At the same time, public finances can be bolstered further to meet the huge expenditure needs. For example, the current VAT rate is among the lowest in the world and well below the rates in other Economic Communi­ty of West African States (ECO­WAS) members – so some in­crease should be considered.”

“Nigeria’s debt is relatively low at about 12 per cent of Gross Domestic Product (GDP). But it weighs heavily on the public purse. Already, about 35 kobo of every naira collected by the Federal Government is used to service outstanding public debt”.
“Exercise restraint- by fo­cusing on the quality and ef­ficiency of every naira spent. This is critically important. As more people pay taxes there will, rightly, be increasing pres­sure to demonstrate that those tax payments are producing im­provements in public service delivery.