WORSENING economic situation in the country has begun to affect the financial credibility of even Federal Government as domestic lenders now feel reluctant to extend credit facilities to it.
But the economic recession has persisted mainly because of application of wrong tools, advice and inadequate synergy between monetary and fiscal policies.
According to Director of Policy at the Central Bank of Nigeria (CBN), Mr. Moses Tule who addressed members of the Chartered Institute of Bankers of Nigeria (CIBN), in Abuja Tuesday, people who were not knowledgeable in macro-economic management had disallowed experts to manage the nation’s economy.
He revealed that a recent effort of the government to raise funds fell flat when lenders declared a lack of confidence in government.
“They came back with only 25 per cent of what they wanted to borrow from the market- domestic market- saying we haven’t seen your fiscal policy; we haven’t seen the direction.
“We will not lend. We will not buy your instrument. ‘That is market speaking. They said no. If you are offering to us at 20 per cent, we will not accept.”’
“What they are saying is ‘we have weighed the risks, they are higher and they said give it to us at 22 per cent or higher, if not we will not take.’ So for every N100, the government takes N78 to themselves and gives the public N22.”
Tule lamented that many people in government’s strategic positions were square pegs in round holes.
“Some came in as doctors into the macro-economic management and giving the tools of as medical doctor to advise on how to solve the problem of recession.
“Some came in as carpenters and they are using carpentry tools to advise on the problems of economic recession, some came in as engineers and they are using their tools to advise on how address economic recession.
“They have not allowed the professionals to do their jobs. They have not allowed the professional to provide the direction.”
He said it was inevitable that Nigeria went into recession as “oil prices are down and the Niger Delta Avengers have blown up oil producing facilities and export facilities, severally.
“When they blew the Forcados, it took government six months to fix Forcados. That was a Loading Bay. And after fixing it, they went back and blew it again. So we have oil prices and production going down.
“The implication is that foreign exchange earnings are going down, but unfortunately, our import expenditure is not going down. It is still in the region of N976 billion, monthly.”
He also condemned a culture of complete reliance on foreign products by Nigerians at the expense of locally made goods.
Tule said “the moment we began to prefer imported goods to our domestically produced goods, we laid the foundation and built the superstructure to where we are now.
“This is a conscious choice. Every country makes the choice where it wants to be. This is what we chose for ourselves as a country.
“When you don’t export. When you sit down there blaming the CBN for the falling value of the Naira, the answers of an export culture and the imposition of an external goods and services culture has imposed on the currency, there is nothing the CBN can do about this. We have got to produce and consume what we produce and export what we produce. That is the way out.”
He recommended heavy spending by government to reflate the economy as happened in other countries such as Japan and the United Kingdom when they had a similar problem.
“There is no other way out because fiscal policy provides the leadership for macro-economic management in every country. Monetary policy only comes as a complementary policy.
“In all climes, fiscal policy provides the leadership and when monetary policy has reached its end, and it can no longer stimulate output growth, fiscal policy must come with huge injections.
“This much is not a new recommendation. The fiscal authorities are aware of this. As you aware, government is looking for some external funding to do exactly this.”