Economy

IMF Urges Sub-Saharan Africa to Domestically Increase Tax Revenues, Others

Published

4 years ago

April 8, 2021

The International Monetary Fund (IMF) has urged countries in Sub-Saharan Africa to do more domestically to increase tax revenues and improve the quality of spending.

Ms Kristalina Georgieva, Managing Director of IMF, made this known in Washington D.

C. on Wednesday at the IMF/World Bank Spring Meetings news conference.

Georgieva also assured that the region would enjoy the fund’s support in improving governance, transparency and accountability to their citizens.

According to her, the fund, in 2020 increased 13 times, the financing, especially on emergency basis to Africa.

“We have advocated for debt service suspension and that has provided up to now, some seven billion dollars to low income countries.

“A big chunk of this is for Sub-Saharan Africa. We have provided debt relief to our most vulnerable members, so Sub-Saharan African countries that fall in this category benefited from it.

“We are looking for ways to reform our concessional lending program, the Poverty Reduction and Growth Trust, so we can do more concessional financing on a larger scale for longer, especially in Sub-Saharan Africa.”

She said the fund now had a big support from the G‑20 and was very optimistic it would get a new SDR allocation which for Sub-Saharan African countries with depleted buffers, would be a very welcome injection.

The MD, however, called on wealthier members who might not need an injection of reserves to lend through it on highly concessional terms funding that could go to countries that needed it.

On the global front, Georgieva said economic fortunes were diverging dangerously.

According to her, a small number of advanced and emerging market economies, led by the U.S. and China are powering ahead.

She added that weaker and poorer countries were falling behind in this multi-speed recovery.

“We also face extremely high uncertainty, especially over the impact of new virus strains and potential shifts in financial conditions.

“There is the risk of further economic scarring from job losses, learning losses, bankruptcies, extreme poverty and hunger.

“Policymakers must take the right actions now by giving everyone a fair shot, not just into people’s arms, but also in people’s lives and in vulnerable economies.”

She gave three policy recommendations that should help boost recovery of economies.

First, All should get a fair shot at the vaccine, which means ramping up vaccine production and distribution and steering clear of export controls.

“It also means fully funding the COVAX facility and ensuring that surplus vaccines are transferred to poorer countries.

“Vaccine policy is economic policy. Faster progress in ending the health crisis can add almost nine trillion dollars to global Gross Domestic Product by 2025, best value for public money in our times, but this window of opportunity is closing fast.

“The scientists have given us vaccines in record time, now governments must show the same sense of urgency and collaboration to provide vaccines to everyone, everywhere.”

Secondly, that there is a fair shot at recovery.

According to her, the key is to support vulnerable households and viable firms for as long as the crisis is around.

This would require targeted fiscal measures and maintaining favorable financial conditions.

She added that given diverging recoveries, careful communication by major central banks and prudent policies in emerging and developing countries to minimise harmful financial spillovers was needed.

Thirdly, there was a fair shot at the future.

Georgieva said it was perhaps the most consequential decision that any government could make in 2021 as the focus should be on scaling up public investment.

This should be in green projects and digital infrastructure, in people’s health and education to ensure that everyone could benefit from the historic transformation to greener, smarter and more inclusive economies.

“To unlock this potential, countries will need sufficient public revenues and more efficient spending.

“In many cases, this will mean more progressive taxation and an agreement on questions like minimum taxation for companies and international tax rights.

“This has to be coupled with stronger support for poorer countries as they fight the crisis and seek to invest in the future.”

She added that low-income countries had to deploy 450 billion dollars over the next five years.

She said that as part of a comprehensive effort, they needed more domestic revenue mobilisation, but also more external concessional financing and more help to deal with debt.

The MD added that further extension of the Debt Service Suspension Initiative that was just announced by the G20 and the new Common Framework for orderly debt restructuring would help.

The virtual Spring Meetings which began on Monday would end on Sunday. (NAN)

Economy

We’ll Continue Borrowing Within Sustainable Limits- FG

Published

4 days ago

May 28, 2025

Editor_01

The Federal Government says it will continue to borrow within manageable and sustainable limits in accordance with the Debt Management Office (DMO) debt sustainability framework.

This is contained in a statement by the Director, Information and Public Relations in the Ministry of Finance, Mr Mohammed Manga, in Abuja on Wednesday.

President Bola Tinubu recently requested the approval of the 2024 – 2026 external borrowing rolling plan from the National Assembly.

Tinubu has requested the National Assembly’s approval to secure external loans of 21.5 million dollars and 15 billion Yuan, along with a grant of 65 million Euro, as part of the federal government’s proposed 2025–2026 external borrowing plan.

Manga said that the proposed borrowing plan was an essential component of the Medium-Term Expenditure Framework (MTEF) in accordance with both the Fiscal Responsibility Act 2007 and the DMO Act 2003.

“The plan outlines the external borrowing framework for both the federal and sub-national governments over a three-year period, accompanied by five detailed appendices on the projects, terms and conditions, implementation period, etc.

“By adopting a structured, forward-looking approach, the plan facilitates comprehensive financial planning and avoids the inefficiencies of ad-hoc or reactive borrowing practices.

“This strategic method enhances the country’s ability to implement effective fiscal policies and mobilise development resources,” he said.

According to the statement, the borrowing plan does not equate to actual borrowing for the period.

“The actual borrowing for each year is contained in the annual budget. In 2025, the external borrowing component is 1.23 billion dollars, and it has not yet been drawn.

“This is planned for H2 2025, the plan is for both federal and several state governments across numerous geopolitical zones including Abia, Bauchi, Borno, Gombe, Kaduna, Lagos, Niger, Oyo, Sokoto, and Yobe States.

“Importantly, it should be noted that the borrowing rolling plan does not equate to an automatic increase in the nation’s debt burden.

“The nature of the rolling plan means that borrowings are split over the period of the projects, for example, a large proportion of projects in the 2024–2026 rolling plan have multi-year drawdowns of between five to seven years which are project-tied loans,” Manga said.

He said that these projects cut across critical sectors of the economy, including power grids and transmission lines, irrigation for improving food security, fibre optics network across the country, fighter jets for security, rail and road infrastructure.

According to him, the majority of the proposed borrowing will be sourced from the country’s development partners, like the World Bank, African Development Bank, French Development Agency, European Investment Bank, JICA, China EximBank, and the Islamic Development Bank.

Manga said that these institutions offer concessional financing with favourable terms and long repayment periods, thereby supporting Nigeria’s development objectives sustainably.

He said that the government seeks to reiterate that the debt service to revenue ratio has started decreasing from its peak of over 90 per cent in 2023.

Manga said that the government has ended the distortionary and inflationary ways and means.

According to him, there is significant revenue expectations from the Nigerian National Petroleum Corporation Limited (NNPC Ltd), technology-enabled monitoring and collection of surpluses from government owned enterprises and revenue-generating ministries, departments, and agencies and legacy outstanding dues.

“Having achieved a fair degree of macroeconomic stabilisation, the overarching goal of the federal government is to pivot the economy onto a path of rapid, sustained, and inclusive economic growth.

“Achieving this vision requires substantial investment in critical sectors such as transportation, energy, infrastructure, and agriculture.

“These investments will lay the groundwork for long-term economic diversification and encourage private sector participation.

“Our debt strategy is therefore guided not solely by the size of our obligations, but by the utility, sustainability, and economic returns of the borrowing,” he said.(NAN)