- The IMF says it supports plans by the federal government to increase tax
- The fund says the move by the government is a step in the right direction
- The global body also gave a number of recommendations for the federal government’s consideration
The International Monetary Fund (IMF) has thrown its weight behind the proposed tax increase by the Nigerian government.
The IMF said the decision to raise Value Added Tax by 50 percent holds positive prospects for the Nigerian economy.
This was contained in the IMF's end-of-mission statement on Wednesday, October 9 sent to journalists.
The global body said although Nigeria’s economic outlook under the Buhari administration’s policies remains challenging, it said the increment of the VAT rate from 5 percent to 7.5 percent is a step in the right direction.
The IMF said growth in the Nigerian economy is expected to pick up to 2.3 percent this year based on a continuing recovery in the oil sector and the regaining of momentum in agriculture following a good harvest.
The statement said revenue initiatives proposed in the 2020 budget, including VAT reforms, are expected to help in partially offsetting declining oil revenues and the impact of higher minimum wages.
The report also included a number of recommendations for the federal government’s consideration.
“A comprehensive package of measures - whose design and implementation will require close coordination within the economic team and the newly-appointed Economic Advisory Council—is urgently needed to reduce vulnerabilities and raise growth,” the IMF said.
Meanwhile, President Muhammadu Buhari has said the Nigerian economy has recorded nine consecutive quarters of Gross Dometic Product growth so far.
The president said this while presenting Nigeria's 2020 budget to the National Assembly on Tuesday, October 8, adding that it is a testament to his government’s economic policies implemented so far.
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