Babatunde Oladapo, the Executive Secretary of West African Tax Administration Forum (WATAF), has urged the Federal Government to develop other sectors of the economy as oil price and trade volume fall globally.
Oladapo made the suggestion in an interview with the press in Abuja, while reacting to recent global market fall by 16 per cent following the outbreak of COVID-19.
The World Health Organisation (WHO) has since declared COVID-19 a pandemic as it has been recorded in most countries across the world, including Nigeria.
“These are indeed trying times for the world economy; the world is being battered by COVID- 19 and the ferocious oil trade war between Saudi Arabia and her erstwhile ally, Russia.
This combat has made oil prices to plummet to an all time low, with the possibility of a further downward decline in oil prices.
On the other COVID-19 is exerting a heavy toll via the decimation of work force across the world,’’ Oladapo said.
He said that it was clear that the world needed a huge load of planning and strategy to stave off the impending economic crisis.
According to him, Nigeria is not left out of the impending economic crisis, being a country whose economy revolves around oil and largely consumerism.
“It is important for the federal government to cut expenditure; a look has to be taken at the 2020 budget.
This should be done with a view to cutting off not so important items, while focusing on essentials such as health care, education and the likes that will bring short term economic yields,’’ he said.
He added that it was imperative for government to set aside enough money for heath care, stressing that a healthy nation is a wealthy nation.
Oladapo noted that government might be tempted to borrow to finance the budget.
This, he said, may prove to be a short reprieve as it would further deplete the country`s foreign reserves when debts would be serviced.
“With China cutting down on purchase of crude and the untoward effect it was having on not only Organisation of Petroleum Exporting Countries (OPEC) member countries, it was imperative for to refocus on the exploration of other avenues,’’ he said.
This, he added was critical to develop other sectors to re-position the country on the path of developing an economy whose buoyancy was not based on crude oil alone.
He stressed the need for government to support tax administrations the more, to ensure that the tax net was broadened and compliance was enforced.
“If this is done fairly and efficiently, the government could access a sustainable source of funding its budget deficit.
In terms of monetary policy, it is clear that the Naira is taking a bashing against the Dollar, which is the popularly acclaimed currency of international trade.
Largely, this is fueled by the panic buying of the dollar by market speculators, which is based on the uncertainty surrounding the impact of COVID-19 and the trade war between Saudi Arabia and Russia,’’ he said.
He said to curtail the inflationary trend of too much Naira chasing few dollars in circulation, government need to reintroduce monetary instruments such as treasury bills and bonds to mop up excess money in circulation.
Oladapo said that though the effect may take a while to produce right results; it was certainly the way to go.
Source: Voice of Nigeria