Borrow more or raise taxes, IMF urges Buhari
THE International Monetary Fund (IMF) has advised the President Muhammadu Buhari-led Federal Government and other African countries to borrow more funds, or increase taxes in order to meet spending needs that existed before and after the Covid-19 pandemic.
The international financial institution said there are three challenges facing African governments: Firstly, to meet increased spending needs; secondly, to contain a pronounced increase in public debt, and finally, to mobilize more tax revenues.
It was gathered that the Nigerian government and its African counterparts can’t choose one without affecting the other two, hence the World Bank stated that there’s an “incredibly difficult balancing act” that is needed to address the situation.
“How policymakers navigate this trilemma will have a huge bearing on economic and social outcomes in the coming years.” the World Bank said in an email titled The Policymakers’ Trilemma, and sent yesterday.
“Higher spending, for example, will require that the authorities either take on more debt or increase taxes. Or both. On the other hand, efforts to boost tax revenues—although politically and socially challenging—would provide much-needed resources to either increase spending or contain debt. Or both.” the statement said.
The need for more spending is draw from the falling region wide unemployment level, which the World Bank put at eight and a half percent in 2020. It was also stated that over 32 million people have been thrown into poverty.
The Bretton Woods institution also mentioned disruption to school and marginalized workers who were affected by the pandemic and disruption to activities across sectors.