The Federal Government on Tuesday said it is targeting an increase in revenue to Gross Domestic Product (GDP) Ratio from 8 percent in 2023 to 25 percent by 2026.
Wale Edun, minister of finance and coordinating minister of economy, disclosed this on Tuesday at the unveiling of the Nigerian banking sector report by Afrinvest West Africa in Lagos.
He said the FG plans to increase the Tax to GDP ratio from 10 percent in 2023 to 18 percent by 2026.
Edun was represented by Armstrong Takang, managing director/CEO of the Ministry of Finance Incorporated (MOFI).
“The successful implementation of the ongoing reforms is expected to deliver meaningful improvements across several key revenue and debt metrics by 2025,” he said.
According to him, restoring macroeconomic stability is a critical foundation for setting the country on the path to rapid, sustained inclusive economic growth.
“Bold action to implement reforms anchored in the Renewed Hope Agenda, have not been without pains, but the government continues to implement intervention programmes, as interim palliatives,” the minister said.
He noted some substitution programmes the government is taking in the area of wheat production and the campaign for substitution of PMS for CNG. The FG had disclosed its plans to convert 10 million Premium Motor Spirit vehicles to Compressed Natural Gas in the next 36 months.
“We believe that given that we are gas nation, and gas is cleaner than PMS if we aggressively move in that direction, it can have a significant impact in terms of the cost of fuelling not only our vehicles with mass transit, but as well as even factors that depend on fuel and diesel, and we are already taking steps in that direction.
”You would be seeing some announcements in due course in terms of some of the steps that have been taken to trigger the demand in that value chain,” he said.
In terms of unlocking liquidity, he said, “the right times when you have assets, especially oil and gas assets that are depleting in value over time, I believe that we can unlock liquidity by putting in some of those assets and creating liquidity now, while not necessarily losing those assets. The second thing around that liquidity is to attract international capital flows in advance using funding arrangements.”
He noted that “MOFI has assets that are worth 10s of trillions of naira. Unfortunately, most of those assets over time we have not leveraged on it. Anybody in finance knows the value of leverage.
“A lot of those assets represent our equity. We have not used that equity to leverage debt and other capital flows. We’re beginning to use some of that.
“We believe that those assets represent significant opportunities for us to be able to unlock liquidity by putting some of those upfront, and in most cases, the cost of that liquidity is a lot cheaper when you use assets you want at the moment rather than unsecured debt for using sovereign debts,” he said.
Edun highlighted some of the key achievements of the current administration, including the removal of subsidy on Petroleum Motor Spirit, the Reform of the foreign exchange market: ‘Willing Buyer – Willing Seller’, the establishment of a fiscal policy and tax reform committee – Submission of ‘Quick Wins Report’, and diligent implementation of the laws and regulations, resulting in reduced smuggling.
Others are restoring government revenue, promoting fiscal balance and prudent management of government expenditure, implementing a series of intervention programmes to help the poor and vulnerable – conversion to CNG mass transit framework, and cash transfer.