International Monetary Fund (IMF) has accused the Federal Government of reneging on some of the conditions it promised to keep in the utilisation of the $3.5 billion loan it provided for containment of some COVID-19 effects in 2020.
IMF Resident Representative in Nigeria, Mr Ari Aisen, who spoke during an online briefing on the latest Article IV Consultation charged the Federal Government to be transparent on its utilisation.
He noted that the promise by the Federal Government to publish its procurement, as contained in the Letter of Intent, had been honoured to some extent but not fully, adding, “the use of these funds should be transparently communicated.
“The government portal has some information but not complete information.”
While noting that Nigeria’s Debt/GDP ratio has not reached a level of overt concern, Aide advised the government to ensure that debt/GDP ratio was not allowed to reach a level that would make it unsustainable.
In addition, he said there must be proper utilisation of borrowed funds for the economic benefits of the nation.
“What is most important to be monitored is the ratio of debt service to revenue, noting that the nation’s revenue profile was very low and therefore not enough to meet budgetary expenditure provisions.
“If there is one policy that has to be a top policy priority it is how to raise revenue.”
The official reiterated the need for central bank to unify forex rates and pursue economic diversification.
Aisen expressed support for CBN’s recent policy on cryptocurrencies.
According to him, many central banks in the world, have taken similar policy decisions such as taken by the CBN.
“A lot has been changing very fast in the global payment system.
“Many of these technological changes can be very important from the policy point of view and financial inclusiveness.
“The issue with some of the cryptocurrencies is that perhaps some care should be taken about their activities.
“The use of cryptocurrencies is a concern. That is why some central banks, not only in Nigeria have these concerns about what kind of activities these cryptocurrencies are put in and how best to monitor those activities.
“Some of them may be illegal activities and may be related to money laundering, even drugs or other illegal things. It is natural that the monetary authorities will be concerned about how best to supervise and increase their oversight regarding the use of cryptocurrencies.
“This is, here, a dilemma which the CBN is thinking closely about its tradeoffs and is trying to design the best policy in the interest of the payment system and the sustainability of the financial sector.”
The IMF chief insisted on what he described as “unification of foreign exchange rates,” which according to him would make the management of foreign exchange (forex) more transparent.
Mr Aisen said there has been some level of scarcity of foreign exchange out there and that it would be useful to unify rates to allow it fluctuate and to make forex more accessible to those who needed them.
The IMF chief then cautioned against raising tax rates in the present circumstances.
“This is not the right time to raise the tax rate,” as according to him, “the government should rather strengthen its tax administration by expanding the tax base and block leakages.”