Nigerian authorities should consider raising value-added taxes and removing fuel subsidies to boost revenue and compensate for a plunge in oil prices, the International Monetary Fund Managing Director Christine Lagarde said.
“Hard decisions will need to be taken on revenue, expenditure, debt, and investment going forward,” she said in a speech to lawmakers in the capital, Abuja, on Wednesday. The government must “act with resolve by stepping up revenue mobilization,” she said, including possibly raising the VAT rate from the current level of 5 percent, which is among the lowest in the world.
The slide in oil prices means the government of Africa’s largest crude producer needs a “fundamental change” in which it operates and can’t rely on its oil wealth to deliver services to the people, she said. President Muhammadu Buhari’s administration will need to focus on managing debt, curbing recurrent costs and eliminating fuel subsidies, she said.