The federal government is currently mulling the doubling of the value-added tax (VAT) paid by Nigerians and the cancellation of some government projects should the downward slide in the prices of crude oil in the global market continues.
Minister of Finance and Coordinating Minister for the Economy, Dr. Ngozi Okonjo-Iweala, who disclosed this in an interview with The Wall Street Journal, said the country was reviewing some 6,000 ongoing projects to see which will be kept, delayed, or scrapped.
Stressing that, “It (austerity measures) will be a huge exercise,” she insisted that if oil prices continue to go down, the federal government will be left with no option but to raise value-added tax to 10 per cent from its current rate of five per cent.
The price of Nigeria’s crude settled for just below $48 per barrel on Tuesday. The nation has been trying to come up with a 2015 budget which reflects a realistic assumption on where crude prices will stand. Nigeria’s 2015 budget initially assumed oil would trade at $78 per barrel, a projection the finance ministry cut to $73 in November and then again to $65 in December.
Speaking about the difficult position her ministry faces as a result of the fluctuating price of oil in the international market, Okonjo-Iweala said “We don’t know where the bottom is… Should it be $50? Should it be $45? Should it be $40? Is the bottom $30? I have no idea.”
As a result, she asserted that the federal government would suspend issuing a new budget with a revised oil price benchmark until crude prices in the global market stabilize.
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