The International Monetary Fund has counseled Nigeria and other Sub-Saharan African nations to concentrate on reducing tax exemptions and mobilizing domestic revenue to decrease their budget deficits.
According to The Punch, it claimed that this was a better strategy than cutting taxes, which may harm economic growth. In a report titled “How to avoid a debt crisis in Sub-Saharan Africa,” the lender made this claim.
According to it, Sub-Saharan African nations frequently rely too much on spending cuts to close their budget gaps. Although this might be necessary for some situations, revenue-generating initiatives like doing away with tax exemptions or modernizing filing and payment processes should take precedence.
“In countries with low starting tax rates, raising domestic revenue has a less negative impact on growth, but cutting spending comes at a considerable cost given Africa’s significant development demands.
“Although challenging to accomplish, countries like The Gambia, Rwanda, Senegal, and Uganda, which depended on a combination of revenue administration and tax policy initiatives, have seen huge and swift increases in revenue.
The IMF also stated that if developing countries increased the proportion of women in the labour force, their GDP would increase by roughly 8% over the following few years.
On its website on Wednesday, the IMF published a weekly chart that stated this. In it, it was stated that increasing the proportion of men and women who worked was one of the very important reforms policymakers could make to revive economies amid the weakest medium-term growth outlook in more than 30 years.
“We estimate that increasing the rate of female labour force participation by 5.9 percent, the average amount by which the top 5% of countries reduced the participation gap during 2014–19, could boost emerging and developing economies’ gross domestic product by about 8% over the next few years,” the IMF said.
