IMF Chief

Drops in 2016 Ease of Doing Business ranking

INTERNATIONAL Monetary Fund (IMF) says Nigeria is creating economic difficulty for its neighbours, being a very important of economy in the west African region. Speaking at a press briefing on the IMF Fiscal Monitor report in Washington, Catherine Pattillo, head, fiscal policy and surveillance division, IMF fiscal affairs department, said Nigeria’s challenges were hurting its neighbours. “The slump in oil production and slow growth has created challenges for the country (Nigeria), but one statistic that is quite striking to me is that the debt profile is weakening and interest payment account for more than 45 percent of federal government revenue,” Pattillo said. “On fiscal side, the important priority should be in safeguarding fiscal sustainability — which means, importantly, to increase non-oil revenues — and implementing an independent price-setting mechanism that minimises fuel subsidy. “So, these are two priorities, while also, of course, improving public service delivery so that citizens can see the benefits of good governance and services financed by the government. “As you know, Nigeria is a very important economy in the region and its success has positive spill over for the region, particularly in West Africa and its challenges then creates difficulties for its neighbours.” Nigeria must raise capacity to recoup taxes Vitor Gaspar, IMF director, fiscal affairs department, also said the debt rise is characteristic of the oil-producing economies. “Message number one is that if you look at the global debt and deficit landscape, you’ll see that the countries that have the highest public sector deficit are oil exporters,” he said. “Nigeria is in debt group as a country that was very much hit by very low oil prices. That is a general message because it applies to oil exporters in general; the group of oil exporters have shared some characteristics. “The most important point in my view of general relevance is that for countries in sub-Saharan Africa to deliver on SDGs, for most of them, the key challenge is the building up of revenue mobilisation capacity through tax capacity building; that’s a key priority. “These countries must improve their capacities to raise revenue, and why is that so? Because there is such need in term of public infrastructure, there is such need in terms of public education, there is such need in terms of health. “For these group of countries, public finance, fiscal policy is part of the overall development strategy, and in that, tax capacity is a fundamental cornerstone.” 2016 Ease of Doing Business: Nigeria ranking drops Latest World Economic Forum (WEF) rankings for global competitiveness in doing business saw Nigeria drop three places from 124 to 127 in the world, meaning it is more difficult to do business in the country. Of the 138 countries considered in the Global Competitiveness Index, Nigeria was only better than 11 countries, most of which are war-torn and crises ridden countries. According to the report, Nigeria ranked least on health and primary education, and was greatly affected by weaker macroeconomic environment.“Although still relatively low, the government deficit has almost doubled since last year and national savings has significantly suffered, worsening the current account position,” WEF said. “Banks are less solid, reducing the availability of credit. Despite the central bank ending its currency peg, financial authorities have retained restrictions on access to the interbank market, meaning access to finance will remain difficult for many businesses. “Additional factors holding back Nigeria’s competitiveness include an underdeveloped infrastructure (132nd), which is again rated as the country’s most problematic factor for doing business; insufficient health and primary education (138th), with only 63 percent of children enrolled in primary school; and the poor quality and quantity of higher education and training (125th).” In 2015, WEF GCI shows that Nigeria’s macroeconomic environment was more bouyant and friendlier for doing business. .

READ ALSO  Health official says 9 family members killed in Yemen air strike