The International Monetary Fund’s forecast a weak revenue generation for Nigeria in short term may have some allegations.
This is joined with the Federal Government’s new forecasts of lower revenue for 2019.
According to a research report by the FSDH Merchant Bank Limited titled ‘Low revenue generation: Implications for Nigerian economy and financial market,’ the decreasing crude oil price may place additional pressure on Nigeria in the short term.
The Federal Government would need to instantly adopt active partnership arrangements with the private sector to enhance infrastructure.
It pointed out that the Monetary Policy Committee members of the Central Bank of Nigeria had limited options: which were to either maintain current policy rates and increase the yields on Nigerian Treasury Bills at the Open Market Operations; or increase the Cash Reserve Requirement to mop-up the expected liquidity in the financial market.
While the FSDH research expects the yields on the NTBs to rise in November, it stated that there were chances to take profit on some Nigerian Eurobonds investments.
There are growth opportunities in the telecommunications industry despite its temporary trials.
It noted that stakeholders should position in stocks that would pay dividends.
While expanding on the ratio of government revenue to nominal Gross Domestic Product, it noted, “Nigeria’s ratio of revenue to the GDP was the lowest between 2012 and 2017.
The IMF assumes it to remain as the lowest in the medium-term among some countries it listed which are:
- South Africa,
- United States of America,
- Saudi Arabia,
- Japan and
- the United Kingdom.
It further explained the Federal Governments expectations from the medium-term expenditure outline.
It added that the projected new national minimum wage would place extra pressure on the government’s fiscal position.