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JUST IN: IMF backs FG’s planned VAT hike

The International Monetary Fund (IMF) may have given tacit approval to the planned increase in VAT by the Nigerian Government.

The global financial body also said that the Federal Government should end fuel subsidies and create a credible timeline to recapitalise weak banks in the country.

These were part of the conclusion of the IMF Executive Board 19 Article IV Consultation with Nigeria.

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

It also called on the Central Bank of Nigeria (CBN) to stop its direct intervention in the foreign exchange market.

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

“They stressed the importance of strengthening domestic revenue mobilisation, 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.”

Details later…