The Minister of Finance Ngozi Okonjo-Iweala on Thursday reassured Nigerians that the country is well prepared for the challenges of declining oil prices.
She told participants at the fourth Capital Market Committee (CMC) held in Abuja that the government had taken fiscal policy measures that would weather the storm if the oil prices fall to $70 per barrel, $65 per barrel and even to $60 per barrel.
Besides, she said that the government was working on a cocktail of measures to generate more revenues from the domestic economy thereby offsetting the impact of the global decline in oil prices.
Another measure, according to her, is cutting down on non- essential expenses.
The minister said, “What we are talking about is that with the oil prices decreasing, we are assuring the capital market that we are going to take fiscal policy measures that will stabilise the economy. We have already announced some of these, that is taking down the benchmark price but we are doing more than that.
“We are taking a scenario based approach. We have already developed a scenario at $70 a barrel, $65 a barrel and even $60. We’re not stopping at $73 per barrel.
According to her, the government is looking at collaborating with the Federal Inland Revenue Service(FIRS) to help strengthen the tax administration of the country such that companies get registered and remit the right taxes.
She said, “We have a bundle of measures raising more revenue, as I spelt it out in my speech, and cutting down expenditure, both recurrent and a bit of waste both in the short-term and the medium-term.
“In the medium-term, we have to look at restructuring our public expenditure. To take out inefficiencies, duplication and so on will enable us weather the storm in conjunction with the monetary policy measures that has just been announced. So, we are ready lower oil prices. What does that mean? It means that the capital market seems a stable place to develop, a stable economy. It sends a good message to them,” she highlighted.
“With the devaluation and also the hike in the Monetary Policy Rate (MPR), much as I know, the increase in the MPR and all those put together would also mean a little more difficulty for access to credit, but under the present circumstances, we feel that the bundle of measures and the MPR are the best way to go, coupled with what we are doing on the fiscal side. I think we have what the capital market needs,” she continued.
She noted that only 25 per cent of the Small and Medium Enterprises(SMEs) are registered; adding that only about N65 billion has been collected by FIRS and another N168 billion is expected to be collected annually.
The minister noted that her ministry had been able to get SMEs to get registered with the corporate affairs commission through the ‘You Win’ programme.
“Only 25 per cent of our SMEs are registered. To increase the number, we are going to do it gently. We are aware that the SMEs are struggling with other disadvantages,” she added.
Okonjo-Iweala further stated that surcharges will be placed on certain luxuries as the seeks raise about N480 billion($3 billion) within the next three years.
“Surcharges will be placed on certain luxuries in the country. We hope to raise N480 billion ($3 billion) within the next 3 years. We are taking that as a base,” she said.
