Ghana emerges second best
The International Monetary Fund, IMF, Thursday, in its Fiscal Monitor report released at the ongoing Spring Meetings of the World Bank and IMF in Washington, United States of America, has ranked Nigeria as the second worst country in the world in the use of Sovereign Wealth funds.
This is even as the Fund advised the federal government to embark on tax reforms while using other fiscal policy instruments to complement the monetary policy in order to enhance economic growth amidst growing protest by Nigerians over proposed increase in Value Added Tax, VAT.
The IMF Fiscal Monitor report showed that Nigeria beat only Qatar in the 33 country ranking where Ghana Sovereign Wealth Fund came second on the top performers after Columbia. The Fund explained that the index was compiled using the corporate governance and transparency scores of the sovereign wealth funds and the size of assets as a percentage of 2016 GDP of the countries considered.
The Report stated: “It is critical to develop a strong institutional framework to manage these resources—including good management of the financial assets kept in sovereign wealth funds—and to ensure that proceeds are appropriately spent. “The governance challenges of commodity –rich countries – that is, the management of public assets- call for ensuring a high degree of transparency and accountability in the exploration of such resources. Countries should develop framework that limits discretion, given the high risk of abuse and allow for heavy scrutiny.”
Meanwhile, Director, Fiscal Affair Department of the IMF, Mr Vitor Gaspar, Thursday, said that tax reform is a major issue in Nigeria and must be given adequate attention. Our approach to telling African stories is now a reference point globally — Adisa He said: “Nigeria can use excise tax and also give tax incentives and exemption to enhance economic growth. Fiscal policy should tread carefully to balance growth and sustainability objectives.”
He advocated for inclusive and growth-friendly budget re-composition to upgrade tax, social spending, and active labour market policies, as well as investment in infrastructure for better public service delivery.” While commenting on global fiscal policy, he said: “Over the past decade, fiscal policy has focused primarily on macroeconomic stabilization in response to shocks, notably the global financial crisis.
Less emphasis has been placed on reforms to foster long-term inclusive growth by adapting to changing demographics, advancing technology, and deepening global integration.“ In many countries, public and private debt hover near historical peaks, long-term growth and development prospects are uninspiring, and inequality remains striking.
With global growth slowing and uncertainty rising, fiscal policy should prepare for possible downturns—balancing growth and sustainability objectives—while also putting more emphasis on reforms to adapt to a fast-changing global economy.”