Senate President, Dr. Abubakar Bukola Saraki has urged the International Monetary Fund (IMF) to support Nigeria’s economic policies and help to spread the message to the international community that the new government in the country is committed to fiscal discipline.
Saraki while receiving a delegation of the Fund led by the Managing Director, Christine Lagarde, said the new government also has a supportive legislature which is devoted to enacting legislations that will create a conducive atmosphere for business to thrive.
He said that at this critical period when the economy is affected by the oil price, what Nigeria requires from international institutions like the IMF is solid backing for its policies aimed at diversifying and modernising the economy, creating more jobs, rebuilding the national infrastructure and attracting foreign direct investments.
He assured the IMF team that there is a bi-partisan commitment of all members of the federal legislature on the need to “work closely with the Executive arm in addressing the challenges facing the economy…(particularly) the need to partner with the executive through legislation that gives confidence to investors that the era of policy uncertainty is gone”.
The Senate President added “That is why the focus of our Legislative Agenda is to give priority to laws that will provide a more conducive business environment, reduce the cost of doing business, make dispute resolution very easy, end impunity and reduce corruption in the system”,.
He assured the visitors that part of the support the legislature aimed to give to the economic recovery effort of the present administration is to “make laws that will block identified legal loopholes that have resulted in revenue leakages; expand the tax base; improve oversight systems; expose corruption and provide better legal frameworks to entrench the rule of law and end impunity”.
The Senate President used the occasion to call on the Central Bank of Nigeria (CBN) to ensure that in reacting to recent developments in the economy, it does not devalue the Naira for the mere sake of devaluation.
Rather, he called on the apex bank to introduce a more flexible foreign exchange regime and reduce the present restrictions on the autonomous market which does not allow business men to bring in foreign exchange or utilise what they have in their accounts.
“The IMF should support our CBN to bring in low interest loans to SMEs. We need to encourage entrepreneurs and make most of our new graduates job creators rather than job seekers. This is an area where we need the financial support and technical assistance of the IMF”, he said.
Lagarde, in her reaction, said Nigeria can still achieve sustainable and inclusive economic growth despite dwindling oil revenue by ensuring fiscal discipline, eliminating corruption and investing in infrastructure like roads, power, healthcare and affordable housing.
She said that government at all levels in the country need to act with resilience, resolve and restraint in order to overcome the present economic challenges.
“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 mobilization. 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 ECOWAS members—so some increase should be considered.
“Build resilience—by making careful decisions on borrowing. Nigeria’s debt is relatively low at about 12 percent of 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.
“Corruption not only corrodes public trust, but it also destroys confidence and diminishes the potential for strong economic growth. At the global level, it is estimated that the cost of corruption is equivalent to more than five percent of world GDP,with over US$ 1 trillion paid in bribes each year.
“Here in Nigeria, important initiatives to discourage graft are underway and should be applauded. Let me highlight the publication of monthly data on the finances and operations of the Nigerian National Petroleum Corporation.
“This provides information on a key sector, building confidence in transparency, and improving accountability of oil revenues, for the benefit of all Nigerians. Much more can—and needs to be—done. Fighting corruption is a multi-year, multi-generational struggle that must be won,” she said.
She said she was positive that Nigeria possesses the capacity and resilience to overcome its present economic challenges and grow a sustainable and inclusive economy.
Lagarde added: “Today your nation has embarked on a new journey. Nigeria is looking ahead, while drawing strength from its assets—the richness and diversity of its culture, the ingenuity of its people, and the belief in a better future.
“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 said.
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