The International Monetary Fund (IMF) is advocating for Nigeria to implement more extensive reforms, asserting that such comprehensive measures are critical for fully realizing the nation’s economic potential.
In its country focus article, ‘How Nigeria Can Unleash its Economic Potential,’ released on Monday, the IMF voiced concerns regarding Nigeria’s economic landscape, the Fund observed that inflation persists above 20 percent, despite the reforms implemented by President Bola Tinubu’s government.
The IMF also noted the high levels of poverty and food insecurity, emphasizing Nigeria’s lack of a robust social safety net to cushion vulnerable populations from economic shocks.
The international lender additionally pointed out that the current global environment poses fresh challenges for the country, marked by elevated uncertainty and high borrowing costs.
To overcome these obstacles, the IMF advised Nigeria to pursue deeper economic reforms, stating,“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.”
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