Economy

Why Nigeria must save oil revenues – IMF

The International Monetary Fund has urged the Nigerian government to save up on oil revenues as fears of a global food shock rise.

The IMF made this know on Wednesday, at the 2022 IMF/World Bank meetings held in Washington DC, United States.

This is coming after recent revenue challenges in the country despite the boom in the global crude oil price.

Policymakers in both the fiscal and the monetary agencies have been charged to work together to ensure stable growth and price stability in Nigeria.

In a report by The Leadership, during the Fiscal Monitor briefing, the IMF Divisional Chief, Fiscal Affairs Department, Paulo Medas, pointed out that even though Nigeria has benefited from higher oil revenues, there hasn’t been a significant improvement in the deficits because of large energy subsidies, issues with the production of oil and pressures on the budget.

He, therefore, recommended that some oil revenues be saved while addressing these issues highlighted. For instance, “Nigeria is one case where tax revenues are really low and this really undermines the capacity of the government to mark these types of shocks and to provide key services.”

Medas also noted that in countries where they are experiencing double-digit inflation rates, the governments are facing serious environmental difficulties, adding that they would need to ensure their fiscal and monetary policies work together to attain price stability.

This is absolutely critical for stable growth and for some public finances in the countries. Countries like Nigeria especially that are oil exporters can take advantage of rising commodity revenues to address some of these needs and to reduce debt, he said.

While, the Director, Fiscal Affairs Department at the IMF, Vitor Gaspar, in his remark revealed that 19 of the 35 low-income countries in Africa are in debt distress as more than 120 million people on the continent do not have enough food to eat.

Gaspar continued by saying, that the food crisis is another devastating effect of this distress, explaining how estimates by the World Bank show that 11 million more people would enter extreme poverty now, a figure which is far greater than what should have been expected under present trends.

“Some estimates indicated more than 120 million people in Africa alone are suffering from food insecurity. They don’t have enough to eat. So this is a very, very serious situation. Governments are facing double-digit inflation, many countries are facing very high debt. Many countries are facing debts similar to the early 2000s when they had debt relief.

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