On Wednesday, the International Monetary Fund (IMF) stated that Nigeria has not been able to save enough and continues to carry a huge fiscal deficit despite rallying oil prices.
According to the foremost international financial institution in its latest Fiscal Monitor report, unlike Nigeria, many oil exporters that have taken advantage of the oil boom are now running fiscal surpluses.
The report however further projected a widened fiscal deficit for Nigeria in 2022 and 2023 as growth slows and inflation remains high.
The IMF nevertheless recommends fiscal tightening to help tackle inflation and address debt vulnerabilities.
Investors King had earlier reported that the proposed 2023 budget as presented by President Muhammadu Buhari has a deficit of more than N10 trillion. The fiscal deficit keeps widening on the back of oil theft and vandalism, subsidies and tax incentives which is as high as N6 trillion in 2023.
On this premise, the deputy division chief in the IMF’s Fiscal Affairs Department, Paulo Medas noted that Nigeria’s fiscal troubles have worsened as a result of huge fuel subsidies, low oil production due to crude theft, as well as low oil income mobilisation.
The IMF noted that the biggest fiscal concern at the moment for Nigeria is debt. The financial institution noted that with N42.84 trillion already accumulated in debt, Nigeria still plans to borrow an additional N8.80 trillion to fund the 2023 budget.
IMF chief, Paolo Medas said “In Nigeria, which has benefited from higher record revenue, so far, we haven’t seen any improvement in deficits as we would hope. Part because of the large energy subsidies, but also other issues with the production of oil and other pressures on the budget.”
He further stated that part of the IMF recommendation is that Nigeria should try to save part of its oil revenues to reduce threats. He also advised that Nigeria should increase its tax revenue generation capacity after it has scaled up the standard of living of the people.
