As part of further measures to enable member countries cope
with the devastating effects of the Covid-19 pandemic, the IMF in had August
approved $650 billion in SDR, out of which Nigeria received $3.4 billion based
on its quota contribution and economic standing.
But the Minister of Finance, Budget and National Planning,
Mrs. Zainab Ahmed, disclosed recently that although the money has already been
released to Nigeria through the Central Bank of Nigeria (CBN), discussions on
the terms of repayment were still ongoing with the IMF.
Responding to a question at the public presentation and
breakdown of the 2022 budget proposals, the minister stressed that negotiations
on the terms of repayment were ongoing with the multilateral institution.
Ahmed explained that the SDR fund has a very concessional
window, disclosing that the $3.4 billion would be part of the 2022 External
Borrowing Plan.
The finance minister also revealed that the federal
government was to evaluate the process and policy effectiveness of fiscal
incentives, including a review of sectors eligible for Pioneer Tax Holiday
Incentives under the Industrial Development Income Tax Relief Act (IDITRA).
The principle of pioneer status as a tax incentive relieves
sectors designated as pioneers from paying company income tax in their
formative years to enable them to make a considerable profit for re-investment
into the business.
The pioneer status is administered by the Nigerian
Investment Promotion Commission (NIPC).
The federal government had in 2017 approved additional 27
industries and products to enjoy the pioneer status, including mining and
processing of coal; processing and preservation of meat/poultry and production
of meat/poultry products; manufacturers of starches and starch products; processing
of cocoa; manufacture of animal feeds; tanning and dressing of leather,
manufacturers of leather footwear, luggage and handbags; manufacturers of
household and personal hygiene paper products and manufacturers of paints,
vanishes and printing ink.
Others were manufacturers of plastic products (builders of
plastic wares) and moulds; manufacturers of batteries and accumulators;
manufacture of steam generators; manufacturers of railway locomotives, wagons
and rolling stock; manufacturers of metal-forming machinery and machine tools,
manufacturers of machinery for metallurgy, manufacturers of machinery for food
and beverage processing.
They also included manufacturers of machinery for textile,
apparel and leather production; and manufacturers of machinery for paper
paperboard production.
Manufacturers of plastics and rubber machinery; players in
waste treatment, disposal and material recovery; e-commerce services; software
development and publishing; motion pictures, video and television programme
production, distribution, exhibition and photography; music production,
publishing and distribution were included
Also on the list were real estate investment vehicles under
the Investments and Securities Act; mortgage-backed securities under the
Investments and Securities Act; and business process outsourcing.
On the review of the 2022-2024 Medium Term Expenditure
Framework (MTEF) which led to the recent upward adjustment of the 2022
appropriation bill from N13.98 trillion to N16.4 trillion, the minister said
the revision became imperative to reflect the new fiscal terms in the Petroleum
Industry Act (PIA) 2021, as well as other critical expenditure in the 2022
proposed budget.
But she was quick to point out that the fiscal effects of
the PIA’s implementation expected to take effect from January would kick in
mid-2022.
She said: “The revised 2022-24 Fiscal Framework is premised
on hybrid of January-June (based on current fiscal regime) and July-December
(based on PIA fiscal regime), while 2023 and 2024 are now fully based on the
PIA.”
The minister, who also spoke about government’s revenue
drive initiatives added: “Our target over the medium term is to grow our
revenue-to-GDP ratio from about 8–9 per cent currently to 15 per cent by 2025.
“At that level of revenues, the debt-service-to-revenue
ratio will cease to be a critical concern. It is now critical to fix our
revenue challenge, because cutting expenditure is not currently a viable
option, as our public expenditure /GDP ratio is also the lowest among some
Africa’s leading economies.
“We must however continue to rationalise our expenditures as
we cannot afford waste. In reality, our largest expenditure items are currently
personnel cost debt service and capital expenditure, which between them account
for 85 per cent of the 2022 budget.”
According to her, the most viable solution to the nation’s
fiscal challenges was to grow revenues and plug all leakages.
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