‘Harmonisation of monetary, fiscal policies crucial to diversification agenda’

Plans by the Federal Government to drive economic growth through non-oil sectors are only attainable if the monetary and fiscal policy actions of the current administration are harmonised.

The Nigerian-British Chamber of Commerce’s (NBCC) latest economic review and policy statement noted that the two instruments must be harnessed to bring about the desired results to restructure the economy, boost liquidity and increase market confidence.

Considering current slump in the country, the group insisted that government reforms must be supported by sustained investment in infrastructure and creation of jobs to restore Nigeria to the path of economic growth.

This is coming after the President of African Development Bank, Akinwumi Adesina said Nigeria needed to coordinate its fiscal and monetary policy more closely.

Adesina said: “I think the naira is devalued, but…monetary policy and also the fiscal policy that synchronisation, that is very important.”

Group Chief Executive Officer of Stanbic IBTC Holdings Plc, Sola David-Borha, had also told The Guardian that it was imperative for government to create alignment between fiscal and monetary policies.

Given the inflation rate as now- above 17 per cent, David-Borha said it had to be tamed.

“That has to be the priority and in the short-term, it does mean that interest rates will still remain fairly high, but strategically, the longer-term direction when inflation starts coming down is for interest rates to also come down,” she stated.

The Monetary Policy Committee of the Central Bank of Nigeria (CBN) had at its last meeting upheld interest rate at 14 per cent in an effort to attract investors.

Meanwhile, the nation’s receding economy is accompanied by a rising inflation, which was put at 17.9 per cent in September by the National Bureau of Statistics (NBC).

NBCC’s Economic Review team said that part of the government’s medium term strategy is to invest in the economy through capital expenditure and supporting initiatives that will create jobs.

The group said: “This is a way to boost liquidity in the economy and restore confidence. We are of the opinion that Nigeria’s economy could return to the path of growth again within the next 18-months if government focuses on an expansionary fiscal policy.”

NBCC stressed that the nation’s exchange rate policy remained a game changer, adding: “While it is difficult for Nigeria to avoid this following the decline in foreign exchange earnings, the situation could better be managed, and to sustain confidence in the Naira.”