The International Monetary Fund (IMF) has indicated that Nigeria’s real per capita income will remain flat on current policies, and that the country need prioritize fiscal consolidation that will mainly be driven by revenue mobilization, especially nonoil revenue.
Pattillo specifically noted that though there is some resumption of economic growth in Nigeria, real per capita income with current policies would remain flat.
“For Nigeria, as you heard in the WEO press conference, in the short term, there is some resumption of economic growth, but real per capita income with current policies will remain flat,” she said, adding that Nigeria would not be able to address inequality and poverty without resuming growth and per capita growth.
“The priorities are fiscal consolidation that will mainly be driven by revenue mobilization, nonoil revenue. And that building of capacity will allow the funding of expenditures: education, health, infrastructure, and the servicing of debt,” she noted.
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She highlighted that since the mid 1990s, there was a lot of growth acceleration in sub-Saharan Africa that allowed average inequality to fall and poverty to be significantly reduced in many countries, and Nigeria is one of the countries where initially from the mid‑nineties inequality fell, but then there was some resurgence more recently.
Gasper equally said it is necessary to increase the capacity of countries to mobilize tax revenue so that they can fulfill their role in promoting inclusive growth and that for Africa and sub‑Saharan Africa in particular, is the main challenge.
He said for low‑income developing countries, public debt is low as a percentage of GDP at around 40 percent and is projected to stay close to that level over the forecasting horizon. He however noted at the same time, there has been an increase in the debt service as a percentage of tax revenue.
“That leads us to emphasize for this group of countries the importance of tax capacity, the importance of building up tax capacity. Tax capacity is crucial to support policies, which are necessary for inclusive growth, including spending on public infrastructure, health, and education.
“In addition, tax capacity, the imposition of taxes at low rates on a broad basis is necessary to ensure that countries have the capacity to serve their public debt and, hence, have unconstrained access to credit markets,” he stressed.