AS Nigerian fiscal and monetary policy authorities and political leaders receive the team of economists from the International Monetary Fund, IMF, who are expected to scrutinise the 2016 budget and possibly the Medium Term Expenditure Framework, MTEF, 2016 – 2018, we expect utmost care on the part of the public policy executives to delineate Nigeria’s national interest from classical economics.

Mrs Christine Lagarde, Managing Director of IMF, had said last week while on a working visit to the policy executives, that a team of IMF economists will be reviewing and auditing the budget and have a good discussion with the fiscal authorities to assess whether the financing is in place, whether the debt is sustainable, whether the borrowing costs are sensible and what strategy must be put in place in order to address challenges going forward.

Nigerian economists have expressed divergent views over this statement, where some believed there was nothing to worry about since the IMF position would remain advisory and Nigerian leaders should be intelligent enough to know and accept only those recommendations that are in the national interest.

Beyond the concern over the seeming interference or overbearing perspective of Lagarde’s statement one of the worrisome issues she raised was her call for increase in Value Added Tax, VAT. She had argued that Nigeria has the lowest VAT rate on the African continent and among the lowest in the world.

The 2016 budget Appropriation Bill already before the National Assembly did not consider increasing tax for obvious reasons. The Nigerian masses are already over stressed economically to be further burdened with a tax increase.

We, therefore, recommend a rejection of any move by IMF to push for tax increases while advising the government to step up efforts to widen the tax net, bringing defaulters and evaders to book.

Secondly, although Lagarde skilfully avoided calling for devaluation of the Naira, she, however, urged the Federal Government to adopt a flexible foreign exchange policy that will better serve the interest of Nigerians.

We join many Nigerian analysts to interpret ‘flexible’ as meaning liberal, free market option in terms of foreign exchange policy. We, therefore, caution that such approach would certainly force devaluation on Nigeria and end up with adverse unintended consequences on the economy, especially on inflation and cost of living. This will lead to further hardship for Nigerians especially the low income group comprising over 80 per cent of Nigeria’s population.

We advise that while carefully reviewing some of the foreign exchange management measures put in place so far to stem the tide in depletion of foreign reserve, efforts should be made to ease access to the foreign exchange resources required by the productive sector as well as essential imports.