The International Monetary Fund and the World Bank are demanding further liberalisation of the Nigerian economy as a pre-condition for supporting debt rescheduling.
They are also demanding, among other things, the privatisation of the public enterprise, the complete deregulation of the petroleum product prices and the liberalisation of the entry into the upstream energy sector, as well as the elimination of subsidies and deficit budgeting.
Managing Director of the IMF, Mrs. Christine Laggard, said the time was right for the Federal Government to specifically project 15 per cent growth in revenue to the Gross Domestic Product, “such as to have some amount of revenue to service debt, reduce interest payment and deploy other resources to effective use, by investing in priority projects, aimed at reducing unemployment.”
She said, “Presently, the economy is generating six per cent revenue to Gross Domestic Product. This, in our view, is inadequate; the micro and macroeconomics indices of the real sector cannot be driven under this low revenue generation.
“An enabling environment needs to be created with a favourable industrial and monetary policies’ climate that could boost local and international investments in the Nigeria economy. The fiscal policy framework needs to be looked upon, to enhance and increase taxes for growth in revenue to at least 15 per cent.”
She also explained that this would assist the economy to save additional funds, reschedule debt, pay interest on debt and have additional funds for investment in the economy, aimed at boosting output, and growing the real and manufacturing sectors.
Laggard noted that the era of deficit budgeting should cease in the Nigerian economy, adding that this deficit budgeting was always financed by local and international borrowing.
“This borrowing always has deleterious effects on the country’s future because every 50 kobo collected from 30 per cent of her revenue goes into servicing of the local and foreign debts,” Lagard observed.
