Fiscal reforms tempered by high inflation, exchange rate –CPPE

The Centre for the Promotion of Private Enterprise (CPPE) has said Nigeria’s fiscal reforms impact is tempered by high inflation and exchange rate pressures, underscoring the need for prudent fiscal management and realistic expectations.

According to a policy brief released by the centre on Nigeria’s fiscal and tax reforms, which highlighted the progress made so far and the challenges ahead,  the reforms have boosted government revenues, expanded fiscal space, and improved the capacity for public investment.

The CPPE noted that the removal of fuel subsidy and the unification of exchange rates have been key drivers of this progress, with collections from Value Added Tax (VAT) and Company Income Tax (CIT) also increasing due to stronger compliance and a gradual recovery in economic activities.

The policy brief highlights several key findings, including the need for revenue diversification, public-private partnerships, and enhanced non-tax revenue mobilization.

It also noted that Nigeria’s budget remains relatively small compared to other countries, limiting fiscal capacity for transformative investments in infrastructure, human capital, and social welfare.

The CPPE has made several policy recommendations, including measuring fiscal gains realistically, broadening and diversifying the revenue base, prioritizing high-impact spending, and strengthening subnational fiscal capacity.

The brief also Emphasises the need for flexibility in implementing tax reforms and reinforcing fiscal discipline across all levels of government.

Director of the centre, Dr Muda Yusuf, emphasised the importance of prudent management, stakeholder collaboration, and social sensitivity in ensuring the success of the reforms.

“With prudent management, stakeholder collaboration, and social sensitivity, these reforms can lay a solid foundation for a more resilient, productive, and inclusive Nigerian economy,” he said.

The policy brief provides a comprehensive analysis of Nigeria’s fiscal and tax reforms, highlighting the progress made so far and the challenges ahead.

As the country continues to navigate its economic challenges, the recommendations outlined in the brief will be crucial in shaping the future of Nigeria’s fiscal policy.