By Africa Links 24
Published on 2024-04-04 10:02:51
Fiscal risks are a major concern in Nigeria, with issues such as budget implementation variation, hidden debt, and forecast risk posing challenges for the government. Hidden debts, such as inter-agency institutional debts, are not disclosed in government debt statements, leading to a lack of transparency. Forecast risks arise when government predictions, such as exchange rate projections, do not align with reality, causing financial volatility.
The devaluation of the naira has put pressure on the government to generate more revenue to pay off external debts. Budgeting for exchange rate fluctuations can be difficult, as the market can change rapidly, impacting the government’s ability to meet its financial obligations. Poor growth over the last two years has further exacerbated fiscal challenges, leading to a cost of living crisis and increased expenses for the government.
Businesses in Nigeria are feeling the effects of energy, currency, and other reforms happening simultaneously. While these reforms may cause short-term pain, they are necessary to address underlying issues in the economy. The government’s commitment to tackling these challenges is commendable, as it seeks to address long-standing issues such as subsidies and exchange rate stability.
Despite the difficulties facing Nigerian businesses, there is hope in these initiatives as they aim to strengthen the economy for long-term sustainability. By addressing fundamental issues such as tax revenue mobilization, the government can alleviate debt concerns and improve public expenditure management. Increasing tax revenue is crucial to addressing fiscal challenges and promoting economic growth.
Property tax is an untapped source of revenue in Nigeria, with a low ratio of property tax to GDP compared to other countries. By enforcing property tax compliance and ensuring that landlords pay their fair share, the government can increase revenue and reduce reliance on other forms of taxation. Digitizing tax collection processes can also improve efficiency and reduce opportunities for tax evasion.
Despite potential pushback from citizens who may feel overburdened by taxes, providing quality infrastructure and services can build public trust in the tax system. Both citizens and the government have a role to play in ensuring that taxes are used effectively and transparently. By demonstrating the benefits of tax revenue through improved infrastructure, the government can increase compliance and support for enhanced tax collection efforts.
In conclusion, addressing fiscal risks in Nigeria requires a multi-faceted approach that includes improving budget transparency, increasing tax revenue, and enhancing tax collection processes. By taking proactive measures to address these challenges, the government can create a more stable and sustainable economic environment for businesses and citizens alike.
