New Telegraph

World Bank to FG: End border closure to curb inflation

The World Bank has advised the Federal Government to consider reopening the country’s land borders as part of measures to limit inflation, a move the bank said will help boost investor confidence.

 

The World Bank stated this in a presentation titled, “Nigeria in the time of COVID- 19: Rising to the Challenge,” made at a webinar organized by the Africa Institute for Leadership and Public Administration (AILPA). Citing the need to tackle proliferation of arms, smuggling and other illicit transborder activities, the Federal Government had, on August 20 last year, closed the country’s land borders with neighbouring countries.

 

However, in its AILPA presentation obtained by New Telegraph yesterday, the World Bank listed the reopening of the land borders among what it described as, “medium-term options (6-15months),” that will help enhance macroeconomic management in the country given the devastating impact of the coronavirus (COVID-19) crisis.

 

According to the World Bank, although the coronavirus pandemic is an unprecedented crisis, which could lead to Nigeria experiencing “potentially the most severe downturn in four decades…even if the outbreak is contained,” it also presents the country with a, “unique opportunity” to lay the foundations for sustainable recovery and growth.

 

Apart from focusing on measures to contain the pandemic and preparing for a “more severe outbreak,” the Federal Government, the Bretton Woods institution said, should also concentrate on enhancing macroeconomic management, safeguarding and mobilizing revenues and “reprioritizing public spending to protect critical development expenditures.”

 

In addition, it recommended “supporting economic activity and providing relief for poor and vulnerable communities.”

 

Specifically, the World Bank recommended that in order to bolster macroeconomic management and boost investor confidence, the country should, in the near term (3 to 6 months), adopt measures such as: Unifying exchange rates into a single window and increasing exchange rate flexibility now, “before foreign exchange reserves are further depleted and pressures mount for a much larger and disruptive devaluation that would hurt the poor”; ensuring clear separation and improved coordination of fiscal, financial, and monetary policies; defining measures for rescheduling and restructuring the loans of borrowers affected by the pandemic; increasing monitoring of bank assets and the effectiveness of temporary forbearance and easing  oreign exchange restrictions to limit inflationary pressures and increase supply of food and key staples.

 

It further suggested that for the medium term (6 to 15 months), Nigeria should: “Refocus management of monetary policy toward the primary objective of price stability; phase out land border closures to limit inflation and direct private sector development to more competitive ends; continue making management of public debt more transparent; review regulations that affect bank recovery and resolution planning and review prudential requirements related to bank sales of non-performing loans to AMCON and similar companies to transparently streamline the process for efficient resolution of nonperforming loans.”

 

Equally, the bank advised that in the near term, Nigeria should: “Ensure business continuity of revenue collecting agencies and facilitate tax payments through online platforms; enhance the collection of oil and gas revenues and communicate a clear timeline for repayment of non-oil tax  relief measures at both federal and subnational tiers of government and increase the transparency of oil and gas revenue reporting through regular publication of financial reports audited financial statements to formulate the reform agenda.”

 

According to the World Bank, after the coronavirus crisis is over, Nigeria should accelerate domestic revenue mobilization reforms, including reviewing and eliminating revenueleaking incentives, adjusting excise duties from items, such as alcohol, cigarettes and fuel and introducing, “measures to counter international tax avoidance by amending the international tax rules related to corporate and personal income taxes, VAT, and capital gains taxes.”

 

It also advised that the country should enhance oil-revenue remittances by managing unbudgeted deductions and underpayments by NNPC as well as introducing new petroleum industry legislation to “safeguard oil revenues and strengthen the management, governance, and competitiveness of the oil sector.”

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