The International Monetary Fund (IMF) has expressed support for the directive of the Central Bank of Nigeria (CBN) that banks should close all accounts related to cryptocurrency transactions.
The IMF cautioned the Federal Government of Nigeria against increasing the tax rate in a bid to generate more revenue, adding that this is not the right time for such a move.
IMF Resident Representative for Nigeria, Mr Ari Aisen, stated this on Wednesday February 17, 2021 while speaking at a special virtual press briefing on the recently published 2020 Article IV IMF Staff Report for Nigeria.
Commenting on the CBN directive on cryptocurrencies, he said that there is global concern for some of the uses of cryptocurrencies which includeillegal transactions such as money laundering and drug trafficking.
According to him, many central banks in the world have taken similar policy decisions similar to the one taken by the CBN.
Speaking on Debt/DGP Ratio, the Resident Rep said that Nigeria’s Debt/GDP ratio has not reached a level of overt concern, adding that it is important to ensure that the Debt to Gross Domestic Product (Debt/GDP) is not allowed to reach a level that would make it unsustainable.
He noted that it is important to manage borrowed funds properly for the economic benefits of the nation.
Aisen said, “What is most important to be monitored is the ratio of debt service to revenue,’ noting that the nation’s revenue profile was very low and therefore not enough to meet budgetary expenditure provision.
“If there is one policy that has to be a top policy priority it is how to raise revenue,” he said.
Speaking on time to raise tax rate, he said, “This is not the right time to raise the tax rate. The government should rather strengthen its tax administration by expanding the tax base and block leakages.”
He urged the federal government to take more concerted steps towards the diversification of the economy, and end the dependence on oil exports as the nation’s main foreign exchange earner.
He said that the volatility of oil price has made the commodity too much of a risk for any country to depend on it for its forex earnings.