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BREAKING: IMF Supports VAT Hike, Asks FG To Recapitalise Weak Banks

The International Monetary Fund (IMF) said the federal government should end fuel subsidies and create a credible timeline to recapitalise weak banks in the country.

At the conclusion of the IMF Executive Board 19 Article IV Consultation with Nigeria, the financial institution expressed its support for the government’s plans to reform and raise value-added tax (VAT).

IMF said 2.5 percent in the medium term, but with population growing at a faster rate, growth per capital will be less than zero percent.

IMF said,”“They welcomed the authorities’ tax reform plan to increase non-oil revenue, including through tax policy and administration measures.

“They stressed the importance of strengthening domestic revenue mobilization, including through additional excises, a comprehensive VAT reform, and elimination of tax incentives.

“Directors highlighted the importance of shifting the expenditure mix toward priority areas. They welcomed, in this context, the significant increase in public investment but underlined the need for greater investment efficiency.

“They also recommended increasing funding for health and education. They noted that phasing out implicit fuel subsidies while strengthening social safety nets to mitigate the impact on the most vulnerable would help reduce the poverty gap and free up additional fiscal space.”

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