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N25.7trn Debt: Experts Oppose IMF’s Call For Tax Hike



Finance experts have disagreed with the International Monetary Fund’s latest recommendation to the Federal Government to raise its tax rate in order to meet Nigeria’s huge amount spent on debt servicing and developmental projects.
The Federal Government spends an average of N2tn annually servicing its debt obligation to local and foreign creditors.
About $3 trillion is reportedly needed in the next 30 years to address the country’s infrastructure deficit.
But the IMF last Wednesday called for an effective debt management strategy that would ensure that the amount borrowed posed limited risk and the funds deployed for developmental purposes.
The global body said that with Nigeria having one of the lowest tax revenue in the world, it would be challenging to service its debt obligations without broadening the fiscal space.
The nation’s total public debt rose by N3.32 trillion in one year to N25.7 trillion as at the end of June 2019, the Debt Management Office said last Tuesday.
The Federal Government owed N20.42 trillion as of June 30, 2019 while the 36 states and the Federal Capital Territory had a total debt portfolio of N5.28 trillion.
Shedding more light on how the Federal Government could boost revenue, Cathy said the priority was how to increase non-oil tax revenue.
She said this was vital based on the fact that the country’s interest payments as a share of tax were very high.
She added: “On Nigeria, the priority is a comprehensive reform to increase non-oil tax and there are a number of reasons this will contribute to creating space for important spending in infrastructure and human development spending.
“For Nigeria, this is very important for a number of reasons. One, because right now, interests payment as share of tax are very high around a third of overall and two-thirds for the Federal Government.”
Responding, a Professor of Economics at the Olabisi Onabanjo University, Ago Iwoye, Sheriffdeen Tella, said the advice to raise tax had to be analysed to determine whether the IMF was asking Nigeria to increase tax or widen the tax net to accommodate those that are not currently captured.
He said: “If they are advising that we should keep increasing tax, that will not be proper. The economy of Nigeria is currently weak and tax is a function of the income of the people. Increasing tax will be putting too much pressure on income.
“We should rather talk of reschedule the existing loan to enable us to have a longer time to pay or pay less. In addition to this, we need to widen the tax net.”
On his part, the Director General of the Lagos Chamber of Commerce and Industry, Mr Muda Yusuf, pointed out that economic growth through reforms would happen if there was greater commitment to creating an enabling environment for investors.
He said the tax paying segment of the economy had been victim of regulatory and policy shocks in recent years.
”Monetary policy is tight enough in my view. Calling for more tightening will be overkill. Lending rates are high and government borrowing continues to have a crowding out effect on the private sector. We need to push back on portfolio flows as the pillar for stabilising the forex market. I subscribe to the demand for the rationalisation of the multiple forex windows and rates, he said.”
A former President, Association of National Accountants of Nigeria, Dr Sam Nzekwe, noted that many Nigerian businessmen were not paying taxes except workers, whose taxes were being deducted from their salary.
He said: “They should be proactive, go to the people and widen the tax net, they should bring those who are not paying tax into the tax net.”
The Chief Executive Officer, Enterprise Stockbrokers, Mr Rotimi Fakayejo, said the advice given by the IMF to Nigeria was not progressive because it would impair productivity of businesses.

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FG Suspends Electricity Tariff Hike



The Nigerian Electricity Regulatory Commission (NERC) has ordered the 11 Electricity Distribution Companies (DISCOs) to suspend the September 1 tariff increase for 14 days.
The commission’s suspension order of the Multi-Year Tariff Order (MYTO) 2020 signed by NERC’s Chairman, Prof James Momoh, was released on its website, yesterday.
NERC suspension followed a joint communique issued by the Federal Government and the labour unions.
The Federal Government agreed that the recent review in electricity tariffs would be suspended by the commission for a period of 14 days to further consultations and finalisation of negotiations between the parties.
The order by NERC said that from September 28 to October 11, the DisCos must revert all charges to the tariff existing as of August 31.
“This means that for the next two weeks, electricity consumers having power above 12 hours who were affected by the over 100 per cent tariff hike would revert to their old charges”.
It said, as empowered by Section 33 of the Electric Power Sector Reform Act, EPSRA 2005, the Minister of Power, Engr Sale Mamman can issue such directive to NERC.
The Secretary to the Government of the Federation, Boss Mustapha and Mamman were among the team that met with the labour unions.

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N2.67bn School Feeding Funds Found In Private Accounts, ICPC Confirms …Ministry Feigns Ignorance



The Chairman, Independent Corrupt Practices and other Related Offences Commission (ICPC), Prof. Bolaji Owasanoye, says the agency has discovered N2.67billion meant for the school feeding programme in private accounts.

The agency, he added, also found over N2.5billion diverted by a deceased worker with the ministry of agriculture, noting that 18 buildings, 12 business premises and 25 plots of land, were also recovered in the ministry.

Owasanoye disclosed this in Abuja on Monday at the second National Summit on Diminishing Corruption in the Public Sector, which was organised in collaboration with the Office of the Secretary of the Government of the Federation.

The summit with the theme, “Together against corruption”, also included the launch of the National Ethics and Integrity Policy.

He said under the Open Treasury Portal review carried out between January and August 15, 2020, 72 out of 268 ministries, departments and agencies had cumulative infractions of N90million.

According to him, while 33 MDAs explained that N4.1billion was transferred to sub-Treasury Single Account, N4.2billion paid to individuals had no satisfactory explanations.

He stated, “We observed that transfers to sub-TSA were to prevent disbursement from being monitored. Nevertheless, we discovered payments to some federal colleges for school feeding in the sum of N2.67billion during lockdown when the children are not in school, and some of the money ended up in personal accounts.”

The ICPC chairman also said under its 2020 constituency and executive projects tracking initiative, 722 projects with a threshold of N100million (490 ZIP and 232 executive) were tracked across 16 states.

He noted that the constituency tracking project of the agency compelled 59 contractors to return to sites, adding that the individuals handling the projects worth N2.25billion had abandoned the projects before the ICPC’s intervention.

President Muhammadu Buhari said his regime would not relent in its efforts to eradicate corruption in the country.

He reiterated his position that if corruption was not eradicated, the menace would kill the country.

Buhari spoke at the second national summit of the ICPC and the inauguration of the National Ethics and Integrity Policy to mark the commission’s 20th and Nigeria’s 60th Independence anniversaries.

Meanwhile, the Ministry of Humanitarian Affairs, Disaster Management and Social Development has dissociated itself from reports that N2.67billion meant for the feeding of schoolchildren during the lockdown was diverted to private accounts.

In a statement issued on Monday night by the Special Assistant on Media to the Minister, Nneka Anibeze, stated that the statement by the Independent Corrupt Practices and Other Related Offences Commission on the said funds was twisted and misinterpreted.

“The Ministry of Humanitarian Affairs, Disaster Management and Social Development hereby informs the public that the Federal Government colleges school feeding in question is different from the Home Grown School Feeding which is one of its Social Investment Programmes,” it said in the statement.

It stated that the school feeding under scrutiny was the feeding of students in Federal Government colleges across the country.

“It is not under the Federal Ministry of Humanitarian Affairs which only oversees Home Grown School Feeding for children in Primaries one to three in select public schools across the country,” the ministry argued.

It added, “The ministry or the minister does not even handle or disburse funds for Home Grown School Feeding. The money for funding the programme neither passes through the minister nor the ministry.”

It explained that the over N2.5billion which was reportedly misappropriated by a senior civil servant took place in a different ministry and not the Ministry of Humanitarian Affairs, Disaster Management and Social Development.

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PIB: Minister Clears Air On Alleged Scrapping Of NNPC



The Minister of State for Petroleum, Chief Timipre Sylva, has dismissed media reports that the new draft Petroleum Industry Bill (PIB) sent to the National Assembly recommended scrapping of the Nigerian National Petroleum Corporation (NNPC).

Sylva allayed the fears while fielding questions from journalists at the National Assembly, on Monday, after an interactive session with the leadership of the National Assembly.

The minister, however, clarified that the new PIB draft sought to commercialise and not to scrap the NNPC.

“We’ve heard so much noise about NNPC being scrapped, but that is not being envisaged by the bill at all.

“NNPC will not be scrapped but commercialised in line with deregulation moves being made across all the streams in the sector comprising upstream, downstream and midstream.

“We have said that NNPC will be commercialised.

“But if you are talking about transforming the industry, the only new thing that we are introducing is the development of the midstream, which is the pipeline sector.

“So, we have provided robustly for the growth of the midstream sector.

“Through commercialisation, the required competitiveness in the sector will be achieved,” he said.

Sylva said that the host communities would also have the best deal from the bill.

According to him, via the PIB, the industry will be transformed, and the Petroleum Equalisation Fund (PEF) and the Petroleum Products Pricing Regulatory Agency (PPPRA) will not exist in the same form that they exist currently.

“But I do not want to go into the details of the bill until it is read on the floor of the Senate,” he said.

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