In a strategic move to bolster its economic landscape, the Federal Government of Nigeria has unveiled ambitious plans to triple the Revenue to Gross Domestic Product (GDP) Ratio from 8 percent in 2023 to an impressive 25 percent by 2026. The announcement was made by Wale Edun, the Minister of Finance and Coordinating Minister of Economy, during the unveiling of the Nigerian banking sector report by Afrinvest West Africa in Lagos on Tuesday.
Edun outlined the government’s comprehensive strategy, emphasizing the objective to increase the Tax to GDP ratio from 10 percent in 2023 to 18 percent by 2026. This targeted surge in revenue metrics is part of the government’s commitment to implementing ongoing reforms aligned with the Renewed Hope Agenda.
“The successful implementation of the ongoing reforms is expected to deliver meaningful improvements across several key revenue and debt metrics by 2025,” stated Edun, highlighting the critical role of restoring macroeconomic stability in paving the way for rapid, sustained inclusive economic growth.
Addressing the pains associated with bold reform actions, Edun assured the public that the government continues to implement intervention programs as interim palliatives. He specifically referenced substitution programs in the wheat production sector and the campaign advocating the substitution of Premium Motor Spirit (PMS) for Compressed Natural Gas (CNG).
As part of the substitution initiatives, the Federal Government aims to convert 10 million PMS vehicles to CNG within the next 36 months. Edun emphasized the environmental benefits of CNG over PMS and hinted at forthcoming announcements regarding steps taken to stimulate demand in the CNG value chain.
Edun also discussed strategies for unlocking liquidity, including leveraging oil and gas assets and attracting international capital flows through advanced funding arrangements. He underscored the vast assets held by the Ministry of Finance Incorporated (MOFI) and the potential for leveraging these assets to unlock liquidity at a lower cost than unsecured debt.
The minister highlighted key achievements of the current administration, such as the removal of subsidy on Petroleum Motor Spirit, foreign exchange market reforms, the establishment of fiscal policy and tax reform committees, and the diligent implementation of laws and regulations resulting in reduced smuggling. Additionally, the government has focused on restoring revenue, promoting fiscal balance, implementing intervention programs for the poor and vulnerable, and embracing the CNG mass transit framework.
The announcement signifies a determined effort by the Nigerian government to create a robust economic foundation, foster revenue growth, and drive sustainable economic development in the coming years.