‘Lower purchasing power, fund costs, credit risks challenge economy’

It is not yet over , according to the officials of the International Monetary Fund ( IMF ) , who came to Nigeria on economic assessment , as the touted non – oil sector and consumer purchasing power were rated low , while risks against banks ’ lending and interest payment on debts remain elevated .
Led by the Senior Resident Representative and Mission Chief for Nigeria, Amine Mati , the officials said the relative stability is driven mainly by higher oil prices and portfolio flows, also known as “ hot money ” , which have helped strengthen fiscal and external buffers .
“ Higher oil prices and short- term portfolio inflows have provided relief from external and fiscal pressures but the recovery remains challenging … activity in the non – oil non – agricultural sector remains weak , as lower purchasing power weighs on consumer demand and as credit risk continues to limit bank lending , ” he said .
Admitting that corporate tax collection efforts improved , he warned that revenue shortfalls and the late adoption of the 2018 budget will impede its implementation , with attendant implications .
According to him , revenue from higher oil prices is limited by net losses from retail fuel sales , while non – oil revenue remains below expectations , with yields from tax administration measures — including the Voluntary Asset Income Declaration Scheme ( VAID ) , and increased tax audits — yet to fully materialise.
But a statement from the Ministry of Finance, signed by the Director of Information , Hassan Dodo, affirmed that the country is making steady progress in domestic revenue mobilization in efforts to close the assessed gap in terms of debt service – to – revenue ratio .
According to him , a report on the revenue performance by the Federal Inland Revenue Service ( FIRS ) , showed about N 2 . 53 trillion collections between January and June 2018 , an increase of N 746 billion , representing 42 per cent , against N 1 . 78 trillion realised in the corresponding period in 2017 .
The amount also showed that the FIRS had already realised 75 per cent of its total target for the year , which is an improvement over what was realised in the corresponding period of 2017 .
Mati maintained that although lower cost of borrowings have kept interest payments within the budgeted envelope , the Federal Government’ s interest- to – revenue ratio is expected to take more than half of revenues this year .
“ Under current policies , the outlook remains challenging . Growth would pick up to about two per cent in 2018 , weighed down by lower than expected oil production and relatively weak agriculture growth .

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