IMF To Help Nigeria, Others On Debts, Tax

Nigeria and other African countries are to benefit from sustainable, broadly-supported fiscal reforms planned by the International Monetary Fund (IMF).

The package was announced in a joint statement at the end of a virtual African Fiscal Forum by the fund’s Managing Director Kristalina Georgieva and European Commissioner for International Partnerships Jutta Urpilainen at the weekend.

According to them, four areas targeted by the reforms are debts, mobilising tax revenue, fiscal prudence and implementing social protection programmes.

Georgieva explained the need to prioritise spending by enhancing the efficiency of government expenditure, public financial management, and refocusing efforts on public investments in physical and digital infrastructure and a green recovery.

She advocated putting poverty back on a downward trend by strengthening social protection programmes, investing in health and education, and compensating those negatively affected by needed reforms.

The IMF also plans to assist countries to mobilise tax revenues, starting with the difficult actions needed to improve the efficiency and equity of tax systems.

Besides, debt vulnerabilities would be addressed by setting clear and prudent medium-term fiscal targets and, in many countries, undertaking fiscal consolidation in a carefully planned and sequenced manner, underpinned by a robust institutional framework.

The duo stated: “Sub-Saharan Africa (SSA) is recovering from an unprecedented crisis. Following the sharp contraction of 2020, growth accelerated in 2021, supported by improvements in international trade and commodity prices.

“Yet, the outlook remains very uncertain given the slow progress inequitable access to vaccinations in the region, limited policy space in many countries, and now spillovers from the war in Ukraine.”

The latter is likely to exacerbate inflationary pressures from food and fuel, worsen the fiscal positions of Sub Saharan African countries, and disrupt capital flows, possibly jeopardising access to external financing.

“Given these additional challenges, the work of African governments and development partners to support the recovery and the continent’s most vulnerable people has only grown more urgent. Africans cannot be left behind,” Georgieva said.

She added that while measures to address current crises are ongoing, the implementation of transformative reforms to unlock the continent’s strong economic potential should not be delayed.

“Recognising that needed reforms must address stakeholder concerns in each country, we are committed to improving our assessment and consideration of political economy factors as we work with countries to design and implement sustainable, broadly supported fiscal reforms.”

The IMF boss said African countries should have strong ownership of reforms, but should not have to walk the path of reform alone.

Her words:”Partnership with the international community is critical, considering the region’s elevated financing needs and a widening gap with the rest of the world. Since the start of the pandemic, IMF financial assistance to sub-Saharan Africa totalled over $26 billion. Europe has committed more than 9.8 billion Euro to the external response to COVID-19 in Africa.”

“Countries’ efforts are also supported by capacity development. Experts work with country authorities every day to help build the institutions necessary to formulate and implement sound economic policies.

“In 2020 and 2021, the Fund had over 2,000 CD engagements annually in the region; this year, we expect to do even more. The European Commission is heavily investing in building capacity in line with our Collect More Spend Better Approach, in close coordination with the partner countries and the IMF.

“Beyond financing, policy advice, and CD, the international community should also continue adapting its operations to better respond to country needs and mitigate policy implementation risks.

“For instance, the IMF plans to launch a new engagement strategy in fragile and conflict-affected countries later this year, with more tailored conditionality and a greater focus on political economy risks.

“The IMF is also in the process of establishing a Resilience and Sustainability Trust – a new lending facility with longer maturity loans, which aims to address macro-critical structural challenges, including climate change, pandemic preparedness, and digitalisation.

“Our common goal is to continue to work closely with African authorities to support the post-pandemic recovery and build stronger and more inclusive economies.”