ABUJA, NOVEMBER 30, 2016 – Director of Monetary Policy at the Central Bank of Nigeria (CBN) Mr. Moses Tule, has said that, to win the current recession war and prevent economy from sliding into depression, all hands must be on deck.
He argued that the foundation for the current recession was jointly laid by all Nigerians years back as a result of citizens’ preference for and high patronage of imported items to the detriment of locally manufactured items.
Speaking yesterday in Abuja as a guest lecturer at the 12th Business Managers’ roundtable, a Chartered Institute of Bankers of Nigeria’s (CIBN) forum, Tule said that, as a country in recession, Nigeria was in dire need of everyone’ contribution to stop it from falling into depression. He said the economy needs “fiscal and other policies to lend a helping hand to the monetary policy to bring it out of present situation”.
Tule emphasised the need for policy coordination between the fiscal and monetary authorities as best strategy to reposition economy for growth.
“The Monetary Policy Committee (MPC) has consistently emphasised the need for coordination of monetary policy and fiscal policy to tackle economic problems.
As you saw in the presentation we made, from September 2016, on a consistent basis, the MPC had made allusion to coordinating fiscal and monetary policy. You need to have policy coordination especially in a situation of recession”.
“If you look at the communique of the last MPC, the MPC had implored the fiscal authorities to look into the issue of settling some of the outstanding contractual obligations as a way of stimulating the economy. That is a strong recommendation from monetary policy which the fiscal policy will need to look into to jumpstart the economy”
He said that, in all jurisdictions, fiscal policy leads the direction while monetary policy complements it. “The fiscal policy provides the leadership for macroeconomic management in any country.
Monetary policy will always come as complementary. In all climes, the fiscal policy provides the leadership and when monetary policy has reached its end and it can no longer stimulate output, the fiscal policy must step in with huge injection”.
He said the fiscal authority has achieved some positive results. “There is so much happening on fiscal policy. I think the onus is on fiscal authority to publicise what they are doing. They are doing a lot. Everyday, there is so much the fiscal policy is doing.
Perhaps in a recession like this, you really need to blow your trumpet because what you need is building confidence. Blow the trumpet, the greater the number the sound reaches, the better and people will know you are doing so much.
The imperative to blow the trumpet and make it louder can’t be overemphasised”, said Tule.
Meanwhile, an Associate Professor ( Banking & Finance department) Nasarawa State University, Uche Joe Uwaleke has urged the Apex Bank to relax its tightening of its monetary policy rate, which he said had squeezed liquidity in the system.
Speaking with the media yesterday, he said that, “If MPR can be dropped, from 14per cent to 12per cent , the Cash Reserves Ratio (CRR) also reduced from 22.5per cent to 20per cent, you will find that, there would be liquidity in the system .
The fear of the CBN is that, if you increase liquidity in the system, there would be pressure on the forex market , there would be inflation. In spite of the sustained monetary tightening policy that the CBN has been adopting, the inflation rate has not come down.”