FG must embrace an asset-driven economy – Economists

The federal government has been urged to diversify its sources of revenue, such as adopting an asset-driven economy, completely eliminating PMS subsidy, and increasing sales tax rates to reduce budget deficits.

This was the economic view at the 2023 Hybrid Budget Seminar of the Department of Economics, University of Ibadan, in conjunction with the UI Eco Alumni Council, which took place on Thursday.

In his presentation on the fiscal and economic components of the 2023 budget, Dr. Ayo Teriba, the CEO of Economic Associates, that the Federal Government, through the creation of the Ministry of Finance Incorporated (MOFI), has taken the right step to generate income from national assets, and as such would maximize profits and attract more foreign attract direct investment (FDIs).

Dr. Teriba argued that the 2023 budget revenue forecast is unrealistic, especially since it is tax-based, as more than half of Nigeria’s active labor force is still unemployed.

He noted that with Nigeria’s debt rising by N33 trillion from N44 trillion to N77 trillion by 2023, “the door to the issuance of external debt may very well be closed to the Nigerian government if the recent serial cuts in state risks are anything to go by.” are to pass.

“Domestic debt issuance limits could have been reached if the N22 trillion stock of Ways and Means progress outstanding is anything to go by. Nigeria has little or no room for debt issuance at home or abroad.”

Dr. Teriba added that in order to make the budget more realistic, “Nigeria should use state assets such as corporate assets, real estate and infrastructure to generate revenue or issue stocks or convertible bonds.

“Nigeria should explore issuable equity obligations as a better and more sustainable alternative to debt obligations. Corporate assets provide scope for share issue/securitization at home and abroad. Real estate offers equity issuance options on residential, commercial and industrial infrastructure assets. Infrastructure offers huge opportunities for operating concessions and joint venture agreements.”

Dr. Olumuyiwa Adedeji, a former senior economist at the International Monetary Fund, said on “Improving revenue collection for growth and development,” and said the federal government should consider completely and permanently abolishing the PMS subsidy and streamlining existing VAT exemptions as measures to increase revenues. .

Dr. Adedeji said other measures include “increasing excise taxes on alcoholic and tobacco products in tandem with broadening the base; strengthen inter-agency coordination and data sharing; a possible increase in VAT rates and the design of more progressive tax systems, especially property and land taxes.”

He stressed that improved revenue collection will help the government “reduce fiscal vulnerabilities and create policy space, ensure adequate funding for social services and infrastructure, and achieve higher economic growth”.

Dr. Adedeji added that revenues can be improved by “restoring oil production to pre-2020 through effective monitoring and surveillance to address oil theft and pipeline destruction and governance issues, and by reinforcing the arrangements underlying the importation of refined fuel products, including estimated daily consumption. .”

Dr. Afolabi Olowookere argues in his presentation on “Improving the Composition of Government Expenditures” that if Nigeria is to earn more, it needs to spend more, especially on capital projects.

He said: “The size of the Nigerian government budget has increased significantly over time, but compared to the size of the economy, it is relatively small.

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Nigeria is ambitious in terms of estimated revenues and expenditures. It can cover its recurring expenses but needs more income, leading to low capital, performance and a high budget deficit. Attempts are being made to increase the share of capital in budgets, but actual capital expenditures have yet to fall below expectations.

Some comparable countries allocate higher capital expenditures to the economic sector than Nigeria. These countries also allocate a lower share to public administration and security than Nigeria.

Other speakers at the seminar include Professor Olanrewaju Olaniyan, who spoke on “Fiscal and Structural Reforms to Boost Nigeria’s Economic Prosperity Beyond Macroeconomics; prof. Adeola Adenikinju, the head of the Department of Economics, UI and Prof. Ibi Ajayi, a retired Professor of Economics, UI.