From Marrakech, Morocco||The Federal Government is considering introducing new tax reforms as part of measures to ramp up revenues and curb borrowing in a bid to revive the economy.
Wale Edun, minister of finance and coordinating minister of the economy, disclosed this in an exclusive interview with BusinessDay on the sidelines of the ongoing annual meetings of the International Monetary Fund (IMF) and the World Bank in Marrakech, Morocco.
He hinted that the 2024 budget would be based on a conservative oil price benchmark.
“We have to be conservative despite rising oil prices. Deciding the benchmark is a collective effort — ministry of budget and planning, ministry of petroleum, ministry of finance,” he said.
“We must also increase revenue via ramp-up in oil production, curb oil theft, remove wastages like tax waivers,” the minister told BusinessDay, without providing specific details.
The federal government’s N21.83 trillion budget for this year is based on an oil price benchmark of $75 per barrel. Although the price of Brent crude, the global benchmark, has rallied to close $90 per barrel, the government continues to grapple with revenue shortfall amid the decline in oil production and rising debt service costs.
At about 7 percent of GDP, Nigeria’s revenue ranks amongst the lowest globally and the government spends a large chunk of its incomes to service debt, which has grown to N87 trillion, according to the Debt Management Office.
Edun, who has consistently ruled out increased borrowing, said the government will focus on policies for domestic resource mobilisation, including through the introduction of new tax reforms, a deviation from the past where the government had to rely heavily on debt to fund budgets.
Another plan is to aggressively push for investments, which he believes will ease current funding pressure and debt.
Edun said the removal of petrol subsidy and foreign exchange reforms have stoked investors’ interest in the country.
He said: “Everybody is positive about Nigeria including the rating agencies. There is a very good vibe, there’s a very good buzz and there’s a lot of interest in the Nigerian economy, in the reforms that are currently being undertaken, and of course, in the investment opportunities that the largest economy in Africa, the largest population in Africa, the most youthful population in Africa has to offer. In addition to that, of course, the resources that are on ground.
“When you put all that together after, perhaps, China, India, Nigeria is the next largest economy that is being sought after as an investment destination. What it takes is for the country to be ready to attract that investment, to turn the initial interest in agriculture, solid minerals, industry, manufacturing, import substitution into investments.”
He reiterated the government’s commitment to growing the Nigerian economy, reducing poverty, and improving living conditions for Nigerians.
“I think we are laying the groundwork for achieving that. The president is making the tough decisions and the reception is very positive. We are here at the World Bank IMF meetings, and so we get a sense of what the whole world thinks because here you have the development finance institutions, private bankers, investors, analysts, rating agencies, and the reaction, from what I know so far, is very positive,” Edun said.
Nigeria, third most-sought-after for investments – Edun
According to him, Nigeria is the next frontier, having secured the leadership of the African governors’ forum within the World Bank Group and IMF, which means having a voice and pushing agenda for the Sub-Saharan African countries in the boards of these Bretton Woods institutions.
He said: “There are two from Africa currently, and we think the third one should come from Sub-Saharan Africa so that we have a bigger voice in governance, we have more representation in the board of the World Bank Group and the IMF.
“I think as Nigeria takes over the chairmanship of the African governors forum at the World Bank and the IMF, the African continent, the finance ministers of Africa, the economic leaders, and representatives of the governments, it’s the chance to unite them in one narrative, one conversation, and one movement to argue for a fair and just energy transition, for instance, including seeking fair analysis and a fair understanding and review of the Nigerian economy, entire African economies by the rating agencies in particular.
“And I think we have that opportunity now as Nigeria, being the chair of the African governors’ forum to unite the continent, speak with one voice and get a better deal for Africa.”