Economy

IMF urges Africa to domestically increase tax revenues, others

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By Folasade Akpan

The International Monetary Fund (IMF) has urged countries in sub-Saharan Africa to do more at the national level to increase tax revenues and improve the quality of spending.

Mrs. Kristalina Georgieva, Managing Director of the IMF, made it known Wednesday in Washington DC during the press conference of the spring meetings of the IMF and the World Bank.

Georgieva also assured that the region will benefit from the support of the fund to improve governance, transparency and accountability to their citizens.

According to her, the fund, in 2020, has multiplied by 13 funding, especially in the event of an emergency in Africa.

“We have advocated for the suspension of debt service and this has so far provided some $ 7 billion to low-income countries.

“Much of this concerns sub-Saharan Africa. We have provided debt relief to our most vulnerable members, so that countries in sub-Saharan Africa that fall into this category have benefited.

“We are looking for ways to reform our concessional lending program, the Poverty Reduction and Growth Trust, so that we can do more concessional financing on a larger scale for longer, especially in sub-Saharan Africa.”

She said the fund now had great support from the G-20 and was very optimistic that it would secure a new allocation of SDRs which for sub-Saharan African countries with depleted buffers would be a very welcome injection.

The managing director, however, called on richer members who may not need an injection of reserves to lend through him on highly concessional terms, funds likely to go to countries that did. need.

On the global front, Georgieva said economic fortunes were dangerously diverging.

According to her, a small number of advanced and emerging market economies, led by the United States and China, are getting ahead.

She added that the weakest and poorest countries were falling behind in this multi-speed recovery.

“We also face extremely high uncertainty, particularly about the impact of new virus strains and potential changes in financial conditions.

“There is a risk of further economic sequelae from job losses, learning losses, bankruptcies, extreme poverty and hunger.

“Policymakers must take the right steps now by giving everyone a fair chance, not only in people’s arms, but also in people’s lives and in vulnerable economies.”

She made three policy recommendations that should help stimulate economic recovery.

First, everyone should have a good chance on the vaccine, which means speeding up vaccine production and distribution and avoiding export controls.

“It also means fully funding the COVAX facility and ensuring that surplus vaccines are transferred to the poorest countries.

“Vaccine policy is economic policy. Faster progress in ending the health crisis can add nearly $ 9 trillion to global gross domestic product by 2025, the best value for money in our time, but that window of opportunity is closing quickly.

“Scientists gave us vaccines in record time, now governments need to show the same sense of urgency and collaboration to get vaccines to everyone, everywhere.

Second, there is a good chance to recover.

The key, she says, is to support vulnerable households and viable businesses as long as the crisis persists.

This would require targeted fiscal measures and the maintenance of favorable financial conditions.

She added that given the divergent recoveries, careful communication from major central banks and prudent policies in emerging and developing countries to minimize adverse financial fallout were needed.

Third, there was a good idea of ​​the future.

Georgieva said this was perhaps the most important decision a government can take in 2021, as the focus should be on increasing public investment.

This should be about green projects and digital infrastructure, people’s health and education to ensure that everyone can benefit from the historic transformation towards greener, smarter and more inclusive economies.

“To unlock this potential, countries will need sufficient government revenues and more efficient spending.

“In many cases this will mean more progressive taxation and agreement on issues such as minimum taxation for companies and international tax rights.

“This must be accompanied by stronger support for the poorest countries which are fighting the crisis and seeking to invest in the future.”

She added that low-income countries should deploy $ 450 billion over the next five years.

She said that as part of a comprehensive effort, they needed more domestic revenue mobilization, but also more external concessional financing and more aid to deal with debt.

The Managing Director added that a further extension of the Debt Service Suspension Initiative just announced by the G20 and the new common framework for orderly debt restructuring would be helpful.

The spring virtual meetings that started on Monday would end on Sunday. (NOPE)

(NAN)

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