The International Monetary Fund (IMF) has said there is need for the Nigerian government to focus on how it would source enough revenue to address its spending needs as it predicted that Sub-Saharan Africa’s region gross domestic product (GDP) is expected to shrink by 1.6 percent in 2020 with its real per capita income falling to 3.9 percent on average as a result to COVID-19 crisis.
Speaking at the press briefing on ‘Sub-Saharan Africa 2020 Regional Economic Outlook’ at the ongoing IMF/World bank spring meetings in Washington yesterday, director of the IMF’s African Department. Mr. Abebe Aemro Selassie said: “The world is facing a serious challenge, and sub-Saharan Africa will not be spared.”
Selassie whilst answering questions on the revenue base of Nigeria said “the focus we feel over the next four to five years should be to try and put Nigeria in the position where the federal government has sufficient revenues to address development spending needs the country has.
“For the medium term, the challenge for Nigeria we feel is really prioritising revenue mobilisation so that government has enough resources that it can devote to building infrastructure, building the network of universities, public education entities that Nigeria so badly needs.
“That really is the number medium-term priority. Nigeria very much falls into the category of countries that are going to be hit the hardest as a result of the outbreak of the pandemic plus the sharp decline in oil prices.
“Already, the economy was contending with the decline in oil prices like we saw in 2015 and so over and above and of course oil prices have declined further complicating policy making environment. I think the challenges that really are well known and articulated really well in the government’s economic growth and recovery plan.
“In the near term, we know that no resources should be speared to be able to put the health crisis threat that Nigeria faces from the COVID-19 pandemic. So, we see scope for more supportive policies on the fiscal side and Nigeria has requested for support under the rapid financing instrument and this is a very quick dispensing resource the government can use to strengthen health spending to provide social protection to people. There is also a scope for having a monetary exchange rate policy framework that would be supportive of this fiscal stance. So, we look for those policies to be adopted to support Nigeria to put this crisis behind it.
“Shrinking incomes will worsen existing vulnerabilities, while containment measures and social distancing will inevitably jeopardize the livelihoods of countless people. Also, the pandemic is reaching the continent at a time when many countries have little room for maneuver in their budgets, making it more difficult for policymakers to respond.”
Selassie against this backdrop called for decisive measures to limit the human and economic costs of the crisis. “First and foremost, the immediate priority is to do whatever it takes to ramp up public health spending to contain the outbreak, regardless of a country’s budget.
“Second, substantial and timely support is crucial. Policies could include cash transfers or in- kind support to vulnerable households, including to informal workers. They could also include targeted and temporary support to hard-hit sectors. The ability of countries to mount an adequate response will depend in large part on their access to concessional funding from the international community.
“Third, monetary and financial policy can also play an important role in sustaining firms and jobs. In support of these domestic measures, a coordinated effort by all development partners will be key. The Fund is working closely with our partners the World Bank, World Health Organization, the African Development Bank and the African Union to respond swiftly and effectively to this crisis.”