By Tony Obiechina, Abuja
The International Monetary Fund (IMF) and other experts at the Nigerian Economic Summit #NES28 have called for deliberate fiscal programmes to support the monetary policies and programmes by the Central Bank of Nigerian aimed at taming Nigeria’s rising inflation.
Speaking during a panel discussion tagged: “Monetary Policy Management in Challenging Times” at the just concluded summit, IMF’s Resident Representative to Nigeria, Mr Ari Aisen said Nigeria will decide what’s appropriate for it in exchange rate management.
He however said said for Nigeria to continue to defend the exchange rate, “you would need enough reserve to defend your local currency”, adding that “That would be difficult to do because multiple objectives require multiple measures to tackle challenges.”
According to him, the recent hike in monetary rates is an important aspect of controlling inflation.
Mr Aisen who said fiscal deficit can be very large, said financing the deficit through money creation would complicate things and make inflation high. He was speaking to CBN funding of government expenditures through ways and means.
As part of recommendation for Nigeria to tackle fiscal deficits, the IMF resident representative said for Nigeria to achieve or make headway, growth, employment and price stability are all good objects.
Also speaking, a non-executive board member of CBN, Prof. Michael Obadan who was part of the panel discussion said fiscal policy of government tends to be weak in terms of revenue mobilization, a situation he said puts pressure on CBN to finance government expenses.
Prof Obadan said the fiscal authority will have to complement the efforts of the Central Bank. “They should build adequate fiscal capacity/space and complement the effort of the Central Bank in tackling inflation,” he said.
President of Manufacturers’ Association Nigeria (MAN) Engr. Mansur Ahmed said “The monetary policy usage is simply not enough.” He said apart from the rates hike, more unorthodox measures need to be deployed to rein in inflation and trigger productivity. He said the lack of understanding of the critical institutions in government may have contributed to making nonsense what have been done.
“The actors involved have not acted in the anticipated manner,” Ahmed said, adding that simple consultation is needed to make policies around price control is required. He said the recent disclosure by the finance minister that her ministry was not consulted on the planned redesigning of some naira notes is an indication of a disconnect between the fiscal and monetary authorities.
Chief economist, Coronation Merchant Bank, Ms Chinwe Egwim moderated the session.
Meanwhile, the minister of finance, budget and national planning, Mrs Zainab Ahmed has said the federal government is borrowing to fund petrol under recovery popularly known as fuel subsidy.
The minister said while some other countries introduced subsidy during the COVID-19 pandemic and at the throes of the Russia/Ukraine war and funded that extra cost with available revenues, Nigeria’s case is worse because it is borrowing to pay for the fuel subsidy.
“In our case, we are borrowing to fund the fuel subsidy. So, it’s double jeopardy. It’s something that has to stop. We are glad that majority of people in the decision-making class, including the political parties have admitted that this is not sustainable and we must stop it, the minister said at a press conference to end the economic summit that was organized by the Nigerian Economic Summit Group and the federal government with the theme: “2023 & Beyond: Priorities for Shared Prosperity.”
At a different session, outgoing chairman of the NESG, Mr Asue Ighodalo said for Nigeria to achieve the aim of shared prosperity, there must be predictability, certainty and continuity. He said Nigeria may need to amend the constitution to guarantee certainty and planning.
He called on the Government to revisit the issue of subsidy removal before it leaves office in May 2023.
The summit also called for a review of the foreign exchange management currently in place to give more certainty and confident to the business community.
Speaking on the theme: ”2023 and beyond: priorities for shared prosperity”, Mr. Ighodalo maintained that the incoming Government must also have a proper understanding of the issues at stake and tackle them appropriately.
In her remarks, the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed said though challenged by a shortfall in revenues, government kept its pact by prioritizing capital releases in favour of critical ongoing infrastructural projects in the power, roads, rail, agriculture, health and education sectors.
She said the government was focused on unlocking the economic potential of the non-oil and high employment generating sectors to achieve sustainable and inclusive growth and development.
Also, the Minister of State, Budget and National Planning, Prince Clem Agba said the National development plan was designed to lift 35m people out of poverty and generate 21m full time jobs by 2025.
He said the plan required the collaboration of the private and public sectors to be actualized.
