The Minister of Budget and Economic Planning, Senator Abubakar Bagudu, has commended the cooperation between the fiscal and monetary policy authorities, saying it is in the best interest of the country’s economy.
“In the last 18 months, we have seen increased collaboration between fiscal and monetary authorities, and something maybe least appreciated is that we have a president who himself is very knowledgeable on the trade-offs involved between fiscal and monetary policy and the Renewed Hope Agenda in a way is a balancing act,” he told the Central Bank of Nigeria’s Monetary Policy Forum in Abuja on Thursday.
He said the collaboration had been aided by the wealth of experience of its drivers, the Minister of Finance and Coordinating Minister of the Economy, Mr Wale Edun, and the CBN Governor, Mr Olayemi Cardoso, who had worked with President Bola Tinubu in the past.
The minister acknowledged the possible divergence between fiscal and monetary policy but expressed satisfaction with how the two authorities have moderated their priorities.
He explained, “The central bank and the fiscal authorities are clear in their priorities and objectives, and no doubt disagree. But that’s how it should be. It should be healthy because when the expenditure-to-GDP ratio is lower than it should be, our first significant objective is to increase revenue-to-GDP and grow the revenue-to-GDP and expenditure-to-GDP ratio. We also have to deal with balancing inflation and driving economic growth, especially in an inclusive manner, as contained in the Renewed Hope Agenda.
“Where we think opportunities still lie is that the elasticity of our productivity is still strong, meaning we can drive productivity growth rapidly.”
He said that while the fiscal authority believed it should spend more on domestic production because the country had strong absorptive capacity in agriculture and solid minerals, it appreciated the central bank’s position that it would not intervene directly.
However, Bagudu pointed out that it was essential to invest more in agriculture, mainly because of the incremental security gains, which had enhanced production in challenged farming areas in the Northwest and Northeast.
He said the enhanced agricultural production was helping to bring down food prices across the country.
The minister said, “Borno State recorded one of the highest harvests comparable to the pre-Briboko-Haram era. Kaduna State is improving, and many other states are improving. So, how do we ensure that we don’t miss that opportunity? Yes, we might have been disappointed with some of the interventions in the past, but maybe we have gained knowledge to calibrate and ensure that we do better in a way that will support further growth in domestic production because the transmission mechanism between domestic output and productivity gains, and inflation effort is very,
very strong.”
He emphasised that the administration’s economic reforms were working and had set the economy on the right path of inclusive growth and development, as acknowledged by global business leaders and rating agencies.
Bagudu stated, “Mr Governor, we were in Saudi Arabia with your deputy on Christmas Eve. As Nigerians, we have every reason to congratulate ourselves. We met with three ministers, who acknowledged that we are undertaking reforms even bolder than theirs because they recognise they are a monarchy.
“So, they withdrew petroleum, electricity, and B80 subsidies at 15%, including on food, to turn their economy in the right direction. But they acknowledge that we have done more in the last 18 months. And given that we are facing an election, they reckon our challenge was even more than theirs.
“That is the biggest thumb among all the international rating agencies that have told us we can do this together. I thank you for inviting us. And this handshake, I believe, will continue to evolve into a better mix of policies that will create deflation and generate double-digit inclusive growth.”
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