The Managing Director, International Monetary Fund, IMF, Mrs Christine Lagarde has advocated for changes in the running of government affairs by strengthening the country’s external position as well as fighting corruption for Nigeria to realize its economic growth.
Mrs Lagarde who was speaking at a meeting with members of the Nigerian Senate at the National Assembly Complex in Abuja said government must prioritise its spending while adopting investor friendly policies for the government’s change agenda to be realised.
The IMF chief told the lawmakers that the economic and security challenges as well as down fall of oil price in the International Markets were not peculiar to Nigeria, therefore formulation and implementation of good policies would make the country’s economy stronger and better.
She said “The goal of achieving external competitiveness requires a package of policies including business-friendly monetary, flexible exchange rate and disciplined fiscal policies, as well as implementing structural reforms.”
The IMF Boss revealed that the Fund does not support the government’s foreign exchange restrictions introduced to allow only limited devaluation after prices for its oil exports collapsed hoping that such measures would be temporary.
“Additional exchange rate flexibility, either up or down, can help soften the impact of external shocks, make output and employment less volatile, and help build external reserves. It can also help avoid the need for costly foreign exchange restrictions, which we don’t really support, and if they exist they should remain temporary by nature,” she argued.
Tax and Fuel Subsidy
On fuel subsidy, Lagarde urged the lawmakers to ensure its removal as it enriched only few depriving the poor of the subsidy meant for them.
“Subsidies must be removed so as to increase the revenue base of the country and reduce leakages. Research has shown that over 60% of the subsidy money in developing nations like Nigeria, goes to the 20% rich in the country, while only 7% of the majority poor, benefit from it”, she explained.
She also called on Nigerian lawmakers to ensure that Nigerians pay more taxes.
“Hard decisions will need to be taken on revenue, expenditure, debt, and investment going forward, the government must act with resolve by stepping up revenue mobilization, including possibly raising the VAT rate from the current level of 5 percent, which is among the lowest in the world.
I firmly believe that Nigeria will rise to the challenge and make the decisions that will propel the country to greater prosperity.
And let me assure you that, as you go forward, as you develop your story, the IMF will support your efforts. Today, I would like to offer my perspective—on your story and punctuate it with three R’s: resolve, resilience, and restraint.
Today policymakers have the opportunity to address near-term vulnerabilities and medium-term challenges—with resolve, resilience, and restraint. Today the ‘Giant of Africa’ is walking with a spring in her step—inspiring others in the region and across the world,” she noted.
The Senate President Dr. Bukola Saraki in his remarks reiterated the commitment of the lawmakers to provide the necessary legislation for disciplined fiscal policies for the economic development of the country.
While describing the numerous challenges facing the nation as surmountable, Senate President stressed the need for collective efforts and patience for its realisation.