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IMF implores Nigeria to prioritise infrastructure projects

The International Monetary Fund (IMF) has urged Nigeria to prioritise and embark on infrastructural projects that would boost the economic growth of the Nation.

Mr. Paolo Mauro, Deputy Director, IMF Fiscal Affairs Department, said this on Wednesday during the launch of the Fiscal Monitor Report for October at the on-going IMF/World Bank Group (WBG) Annual Meetings in Bali.

The report looks at global public sector assets and liabilities 10 years after the global financial crisis.

He said that increasing revenues was very important for Nigeria, but equally significant was the choices made on what it would be spent on.

“Generally, I think it is not only about shoring up the revenue, but also being careful about the spending by improving the choices that one makes on which infrastructure project to carry out.

“How does one go about selecting the ones that are really going to boost growth?

“So I think it is a priority to increase revenues but also to be careful about the ways we can make spending more efficient.”

Mauro also said that the ratio of interest payments to revenue for Nigeria was high, adding that increase in revenues would ensure social spending, build infrastructure and carrying out other types of spending on economic growth.

He added that discussions had been on over the years with the government on how to go about achieving economic growth since it was clearly a priority.

“We see the priorities in tax administration but there are also aspects of tax policy that could help.

“In tax administration, to increase the compliance rate, something that could be done is to increase tax audit to use e-filing to a greater extent, there are also data matching exercises that could be conducted.

“Generally, trying to reduce tax evasion and possibly corruption are priorities on the tax administration side.

“On the tax policy side, usually, what has been recommended in previous discussions is to increase excise tax on tobacco and alcohol, while stamp duties are something that can be looked at also,” he said.

On global trend, Mr. Vitor Gaspar, Director, Fiscal Affairs Department, said that global debt continued to rise in 2017 reaching a new record high at 182 trillion dollars.

He added that in the few years between the Asian Financial Crisis and the Global Financial Crisis, global debt more than doubled with China accounting for more than 40 per cent of the US dollars value of the increase in the last 10 years.

He also said that the US and China together represented almost two-thirds of the increase.

He also said that the monitor showed that for a sample of 31 countries, covering 61 per cent of global Gross Domestic Product (GDP), total assets were worth 101 trillion dollars, or 219 per cent of GDP.

“In the advanced economies, prior to the global financial crisis, private debt was rising fast while public debt was broadly stable.

“After the global financial crisis, we see a role reversal, with fast increases in public debt. The sharp increase in public debt was only partly due to the implementation of fiscal stimulus measures.

“Another contributing factor was the massive expansion of public sector balance sheets because of government rescue actions,” he said.

Citing an example with the United Kingdom, Gaspar said public large‑scale financial sector interventions resulted in a reclassification of some large banks into the public sector.

He added that as a result, public sector liabilities increased by more than 200 per cent of GDP between 2007 and 2009, from 126 per cent of GDP to 335 per cent of GDP.

According to him, assets also increased. He said that public debt ratios increased because of the previously mentioned interventions but also because of reductions in output.

Gaspar urged countries to be transparent about their public wealth and use it to serve economic and social goals.

“One aspect that we explored specifically in the fiscal monitor has to do with how much would countries get if they were to manage their public corporations and their financial assets better.

“We just assumed that countries could improve closer to best practices which are already available around the world and we present estimates according to which additional revenues could be as large as three per cent of GDP.

“This is an amount which is about the same quarter of magnitude of revenues from corporate income taxation in advanced economies so it is a very large number.”

He also said that of the countries that were covered in the monitor’s financial assets represent 99 per cent of GDPs, while 72 per cent corresponds to infrastructure and assets and 38 per cent to natural resource wealth.

Credit: PM News

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