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World Bank, IMF to Undertake Joint Action Plan On Debt Reduction For IDA Countries

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The World Bank and International Monetary Fund (IMF), have proposed to undertake a joint action plan on debt reduction for the most indebted International Development Association (IDA) countries.

Mr David Malpass, the President, the World Bank Group, said this on Wednesday during a virtual meeting with the G20 Finance Ministers and Central Bank Governors at the ongoing IMF/World Bank annual meetings in at Washington D. C.

Malpass said that it was urgent to make rapid progress on a framework because the risk of disorderly defaults was rising.

He said that the bank’s latest economic and poverty data showed that desperate inequality was being caused by the COVID pandemic and economic shutdowns.

“The recession in advanced economies is less severe than had been feared but in most developing economies, it has become a depression, especially for the poorest and extreme poverty may rise by 150 million by 2021.

“Soon after our spring meetings, we were able to launch health emergency programmes in 111 countries and began a surge in our grants and highly concessional lending that will reach the limits of our capital structure and commitment authority.

“As part of this effort, we expect to provide over 50 billion dollars in grants or highly concessional credits by June 2021, helping provide large net positive flows to the poorest and most fragile countries and people.”

The president recalled that in March, the G20 endorsed a vital debt relief programme for the poorest countries, giving people a ray of hope.

He said that the Debt Service Suspension Initiative (DSSI) helped increase fiscal resources for over 40 countries and created more transparency on the overwhelming debt burden.

According to him, the goals for debt relief are fiscal savings for the poorest countries, greater debt transparency and a path forward for countries in debt distress.

“We are making progress but not nearly enough. The DSSI extension being agreed today is welcome and the term sheet has been strengthened in important ways.

“However, some core DSSI-related problems are still unresolved, notably a lack of participation by private creditors and incomplete participation by some official bilateral creditors.

“The bigger challenge is the need to look beyond DSSI. It is important to note that the DSSI defers payments into the future but doesn’t reduce them.

“Interest charges compound quickly on the deferred amounts, leaving countries with even more debt.

“The DSSI has been a stopgap to provide fiscal resources and greater transparency while a longer-term solution for the debt crisis can be developed,” he said.

Malpass said that the tendency in past debt crises was for countries in debt distress to go through a series of “ineffective debt reschedulings that leaves them weaker’.

He said that creditors might eventually allow them to get to a debt reduction process but at a tremendous cost to the poor, adding that they needed to work better and faster this time.

“On a positive note, I am happy to announce that yesterday afternoon, our board approved a package of up to 12 billion dollars to expand and fast-track COVID response for the purchase and distribution of COVID-19 vaccines, tests and treatments.

“The scale of the challenges ahead is staggering, so we need to do more. With the strong support of its shareholders, IDA has frontloaded IDA-19 resources to the fullest possible extent as a key part of the surge in our commitments this fiscal year.”

He, however said that IDA lending would have to decline in the next two years even though the latest forecasts, including those just announced by the IMF, suggests that the reduction in economic activity would extend well into subsequent years.

Malpass said that the bank was proposing to IDA deputies later in October, a 25 billion dollar supplemental COVID Emergency Financing Package.

The News Agency of Nigeria (NAN) reports that the IDA, a member of the World Bank Group, is an international financial institution with 173 member countries.

It offers concessional loans and grants to the world’s poorest developing countries.

The 2020 Annual Meetings of the IMF and the World Bank Group holding in Washington D. C. began on Oct. 12 and will end on Dec. 16. (NAN)

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FCCPC: Electricity Topped Consumers’ Complaints In 2020

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The Federal Competition and Consumer Protection Commission (FCCPC) says it received the highest consumer related complaints from the electricity sector in 2020.

Speaking in Abuja on Sunday, Babatunde Irukera (pictured), chief executive officer of FCCPC, said the banking and telecommunication sectors ranked second and third respectively on the complaints chart.

He added that the aviation sector was ranked fourth.

“Our complaints resolution team is still a very small team of people and they are dealing with thousands of complaints,” Irukera said.

“We are looking at expanding capacity to have more hands handling the complaints but the real game changer in handling complaints better and faster is for companies to start doing it.

“The person who has the least open complaint in our resolution team has about 800 complaints across sectors and that is one person. If you multiply it by 12 to 15 persons, you will imagine the number of complaints.

“Being able to expand to a point where we are able to operate more efficiently, we will keep training, leveraging technology, the more we leverage technology, the more efficiently we can do our work.”

The commission was established by the 2018 Federal Competition and Consumer Protection Act (FCCPA) to promote fair, efficient and competitive markets in the Nigerian economy, facilitate access by all citizens to safe products, and protect the rights of all consumers in Nigeria.

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FEC Approves CBN’s Request To Renovate National Theatre For N21b

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Lai Mohammed, minister of information and culture, said on Wednesday that the Federal Executive Council (FEC) has approved a memorandum of understanding (MoU) between the Central Bank of Nigeria (CBN), and the ministry of information and culture for the renovation of the National Theatre in Iganmu, Lagos.

He spoke at the end the weekly FEC meeting in Abuja.

The federal government, on July 12, 2020, handed over the national theatre to CBN and the bankers’ committee to signify the kick-start of the renovation process.

“This is a landmark approval because, it has paved the way for investment in the creative industry as part of the resolve of this government to create at least one million jobs in the next three years in the creative industry,” Mohammed said.

“The CBN and banker’s committee are willing to invest N21.894 billion to renovate, refurbish and commercialization (run it profitably) of the national theatre complex. The MoU has a life span of 21 years after which it will revert back to government.”

The minister assured that no job will be lost after the national theatre is renovated, adding that the “brand new national theatre, an event centre” will instead create more jobs.

Asides from this, FEC approved about N9.43 billion to complete the digital switch over (DSO) in broadcasting; N8.98 billion for a new national ICT park in the federal capital territory (FCT) to coordinate public and private ICT hubs in Nigeria.

The council also approved a new national policy on aging which would take care of the needs of the aged people across Nigeria; approved the ministry of water resources memo to construct Damaturu water supply project in Yobe state worth N8.43 billion.

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Adesina identifies Debt Service As Greatest Risk To Nigeria

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The President of African Development Bank (AfDB), Dr. Akinwunmi Adesina, has warned that debt service is Nigeria’s greatest risk, even as he urged the federal government to take steps to increase tax revenue in the face of dwindling oil income.

The Director of Communications and Liaison of the Federal Inland Revenue Service (FIRS), Mr. Abdullahi Ahmad, stated that he spoke virtually at the recently held First Annual National Tax Dialogue .
Dr. Adesina was quoted as saying that due to the impact of the COVID-19 pandemic, Nigeria’s economy shrank “by 3% in 2020 on account of falling oil prices and the effects of the lockdowns on economic activities,” adding, “with shrinkage in oil revenues, debt service payments pose the greatest risk to Nigeria.”
He stressed further that for Nigeria to overcome the pandemic, “taxes must form a significant percentage of government revenue. Digitalization of tax collection and tax administration is critical to ensure greater transparency of the tax system, widening of the tax base, while mitigating compliance risks and encouraging voluntary tax compliance.”
Tax experts and stakeholders at the event called for the automation of tax collection by the FIRS through data and intelligence in order to ease tax collection, as well as, improve revenue.
Executive Secretary, African Tax Administration Forum (ATAF), Mr. Logan Wort, harped on the place of technology in generating revenue for the country in a post-Covid economy.
Mr. Wort, who joined the dialogue virtually from South Africa, stated, “Domestic Resource Mobilisation (DRM) is expected to contribute at least 75% to 90% on average per country” in the post-Covid era, adding that Nigeria and other African countries should note, “improved tax revenue will have to take prime position” in the scheme of things.
He urged Nigeria to pay serious attention to e-commerce and the digital economy sector where big, trans-national digital conglomerates like Google, Netflix and Uber operate and make huge, tax-free profits as a possible way of increasing tax revenue generation.
He said Nigeria should borrow a leaf from Ghana in e-commerce taxation, projected to fetch Ghana $450 million in annual tax revenue.
Ekiti State Governor, Dr. Kayode Fayemi, who was chairman of the Dialogue, was quoted as lauding the FIRS “for its performance in the 2020 fiscal year, despite operating in the most challenging period. The Service not only collected N4.9 trillion in taxes, achieving 98% of its target; only 30.6% of this was attributed to Petroleum Profits Tax, from what used to be over 50%”.
He urged participants to, “interrogate how Nigeria can further deepen the use of technology to improve tax compliance nationally and across sub-nationals.”

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