The Federal Government is contemplating the implementation of fresh tax reforms as part of its strategy to bolster revenue generation and reduce the need for extensive borrowing in order to stimulate economic recovery.
Wale Edun, who serves as both the Minister of Finance and Coordinating Minister of the Economy, discussed these considerations in an exclusive interview at the annual meetings of the International Monetary Fund (IMF) and the World Bank in Marrakech, Morocco. Edun indicated that the forthcoming 2024 budget would be built on a conservative oil price benchmark.
He stressed the need for caution despite the rising oil prices, emphasizing that determining the benchmark involves a collaborative effort among the Ministry of Budget and Planning, Ministry of Petroleum, and Ministry of Finance.
Furthermore, Edun emphasized the necessity of increasing revenue through measures such as boosting oil production, tackling oil theft, and eliminating inefficiencies like tax waivers. While he didn’t provide detailed specifics, he underscored the importance of these efforts.
The current federal budget for the year, totaling N21.83 trillion, utilizes an oil price benchmark of $75 per barrel. Despite Brent crude prices reaching nearly $90 per barrel on the global market, the government continues to grapple with revenue shortfalls caused by declining oil production and mounting debt servicing costs.
Nigeria’s revenue stands at approximately 7 percent of GDP, a figure that ranks among the lowest worldwide. The government allocates a substantial portion of its revenue to service its debt, which has climbed to N87 trillion, according to the Debt Management Office. Edun, who has consistently opposed increased borrowing, is committed to focusing on domestic resource mobilization policies, which will include the introduction of fresh tax reforms. This represents a significant shift away from previous reliance on debt as the primary means of budget funding.
The government also aims to aggressively promote investments, with the belief that this approach will alleviate current funding pressures and debt-related concerns.
