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IMF advises Tinubu to rev up revenue, reduce borrowing



IMF advises Tinubu to rev up revenue, reduce borrowing

The International Monetary Fund (IMF) has urged President-elect Bola Tinubu to take steps to increase the country’s revenue base.

Ari Aisen, the IMF resident representative, also advised Mr Tinubu to reduce dependence on debt to fund expenditures drastically. He stated this during a virtual forum on the Nigerian debt situation.

“How do you reduce the spending needs of the government? That should be the question. It is really about fiscal discipline. People should not permanently spend beyond what they generate in revenue because it becomes unsustainable,” Mr Aisen explained. “Eventually, some people will come and ask for their money back; and some will refuse to give further loans.”

The IMF official added that the critical thing to do was for countries to rely more on their revenue to finance their expenditure, noting “that is the autonomy and the independence that we like to see our member-countries rely on.”

Vahyala Kwaga, a senior research and policy analyst at BudgIT, urged the incoming government to address the distortion between fiscal and monetary authorities.

“The ways and means is another lump sum of money that affected the economy significantly in the sense that it compounded the problem of inflation,” stated Mr Kwaga. “A lot of these monies, according to the president, were used for infrastructure projects. Some were also given to the state governors as bailouts.”

He urged Nigerians also to beam their searchlights on the state governors and their fiscal behaviours.

“The federal system that Nigeria operates allows the centre to provide monies for the states. The question is, how prudent are these monies expended when they are given to the states?” said Mr Kwaga. “The transparency and accountability problem we have in the use of funds is extremely problematic,” urging the legislature to rise to its responsibility by curbing abuse of process by the executive as witnessed in the ‘Ways and Means Advances’.

Kolawole Oluwadare, deputy director of the Socio-Economic Rights And Accountability Project (SERAP), stressed that the issue “is more about the use of the loans,” noting that “borrowing and the use of the loans are related.”

“That is why the Fiscal Responsibility Act has provided clearly that borrowings by the government should be strictly for capital projects. The Act also provides that the government should undertake a cost-benefit analysis, among other requirements, before any borrowing is done,” the SERAP deputy director explained.

Monday Usiade, the director of the Market Development Department at the Debt Management Office (DMO), said the office was responsible for managing Nigeria’s debt.

According to Mr Usiade, the DMO receives approval from the authorities based on the difference between revenue position and expenditure and the actual amount to be borrowed.

“We are at the service of the country, and our job is to look at the best ways, options, sources and all that we can put together to fund the government as approved by the authorities,” Mr Usiade said.

He added that the DMO was transparent in its functions, urging the incoming government to be more concerned about narrowing the gap between expenditure and revenue to limit borrowings.


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