Friday, 31 March 2017

IMF advises Buhari on how to end recession

IMF advises Buhari on how to end recession

The International Monetary Fund (IMF) has advised President Muhammadu Buhari to make stronger policies if he wants to take Nigeria out of recession.

 Daily Post reports that the IMF advised the president to raise taxes in order to comply with the Economic Recovery and Growth Plan (ERGP).
The IMF that had just concluded its Article IV consultation with Nigeria commended the recovery plan of the Buhari administration but said subsidies must be removed. 

The IMF in a statement stated: “Executive Directors recognized that the Nigerian economy has been negatively impacted by low oil prices and production.” “Directors commended the efforts already made by the authorities to reduce vulnerabilities and enhance resilience, including by increasing fuel prices, raising the monetary policy rate, and allowing the exchange rate to depreciate. “However, in light of the persisting internal and external challenges, they emphasized that stronger macroeconomic policies are urgently needed to rebuild confidence and foster an economic recovery.
 “Directors welcomed the authorities’ Economic Recovery and Growth Plan (ERGP), which focuses on economic diversification driven by the private sector, and government initiatives to strengthen infrastructure—including the recently adopted power sector recovery plan. However, they underlined that without stronger policies these objectives may not be achieved. “Directors generally emphasized the need for a front-loaded, revenue-based fiscal consolidation starting in 2017, to reduce the federal government interest payments-to-revenue ratio to sustainable levels.
“They underscored that priority should be given to increasing non-oil revenue, including through raising VAT and excise rates, strengthening compliance, and closing loopholes and exemptions. “Administering an independent fuel price-setting mechanism to eliminate fuel subsidies, strengthening public financial management, and developing a well-targeted social safety net would also support the adjustment. Directors stressed the need to contain the fiscal deficit of state and local governments, including through improved transparency and monitoring.”

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