IMF recommends higher taxes as a solution to Nigeria’s fiscal challenges

During a press briefing on the Sub-Saharan Africa Regional Economic Outlook at the World Bank Group/IMF Meeting in Marrakech, Morocco, Abebe Selassie, the Director of the IMF Africa Department, proposed a higher tax policy as a means to address Nigeria’s fiscal challenges.

Nigeria has been grappling with a fiscal crisis, having spent 96% of its revenue on debt servicing in 2022. In the first half of 2023, debt servicing consumed N2.34 trillion. To tackle this issue, the IMF Director emphasized that the Nigerian government needs to support policies like fuel subsidy removal and naira unification with effective measures to boost revenue.

While commending the government for exchange rate reforms and fuel subsidy removal, Selassie underscored the importance of tightening monetary policy and increasing tax revenues. He stressed that a comprehensive package of reforms is necessary, particularly focused on addressing Nigeria’s fiscal challenges due to inadequate tax revenues.

Despite these challenges, Selassie recognized Nigeria’s tremendous potential and recent positive reform efforts. He advocated for making these reforms comprehensive and mutually reinforcing to create a more sustainable and robust economic environment.