Reuters) – Nigeria will have to adjust to oil prices heading lower for some time to come, Finance Minister Ngozi Okonjo-Iweala said on Thursday in an interview in which she also cut the outlook for economic growth next year.
Africa’s largest economy relies on oil exports for 70 percent of government revenues and has been hit hard as crude prices have fallen to four-year lows below $80 a barrel after trading above $115 as recently as June.
Asked if she thought the 30 percent drop in crude prices since June might prove temporary, Okonjo-Iweala said Nigeria needed to adjust to lower levels for good.
“The IMF, the analysts feel that the trajectory is going down, and that it is a permanent shock, and we have to adjust (to the possibility) that it is a permanent shock,” Okonjo-Iweala told Reuters during the interview in London.
“We will have to take the necessary measures and we have already started to do that.”
She pointed to plans to increase taxes on luxury items and to ban non-essential government travel as first steps, adding that she was also working on plugging tax holes overall.
Further down the line, there is more potential to raise revenues through taxation if required, she said.
“We have the lowest VAT in the world at 5 percent, so we have a lot of room to manoeuvre,” she said, adding there were currently no plans to raise value-added tax in the works.
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