The Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, has said the long-term supply of capital into critical sectors of the economy would boost productivity, create new jobs, and continue to stimulate sustainable growth.
The minister said in the short-term, the step-up in pricing of FGN securities was boosting dollar inflow into the economy, though at an increased cost to the government.
Edun disclosed this during his presentation on “Reconstructing the Economy for Growth, Investment and Climate Resilience Development”, at the Lagos Business School Breakfast Club.
He said the removal of subsidy on petrol and the unification of exchange rates markets remained key reforms which were prerequisites to pursuing macro-stability, with the expected transitory shocks – and helped to address cost anomalies.
The minister pointed out that the removal of the dysfunctional fuel subsidy which had caused huge distortion in the government’s fiscal position, eroded any chance of fiscal expansion which stood at over N400 billion monthly including two percent of GDP.
Nonetheless, Edun said the economy was currently bedeviled by a combination of challenges that were negatively impacting businesses and households.
The minister, however, pointed out that the federal government was implementing a bouquet of policy enablers to successfully attract and retain long-term domestic and foreign direct investments in the economy.
Addressing business leaders at the forum, the minister said the government hoped to achieve increasingly stable and predictable exchange rates, risk reflective yields and targeted policies to increase its ability to attract local and foreign capital.
He said the country had made steady progress in establishing the critical frameworks, policies and market enablers that would promote progression towards a more climate resilient economy.
He said the current administration remained committed to increasing food and national productivity and investments by engaging with manufacturers to develop programmes and policies that would cushion the impact of current challenges and stimulate mass scale productive activity across multiple sectors.
He told them that part of the government’s priority interventions would be to deploy fiscal tools to significantly increase the supply of grain and other inputs, creating jobs and increasing the exports of farm produce.
Edun added that food inflation, which peaked at 37.9 percent in February, remained the primary driver of inflationary pressure in the economy.
However, the minister, among other challenges, noted that food production remained relatively low in comparison to demand, adding that local output was low in relation to population growth.
He also said cost anomalies are impacting macro-economic stability, high inflation, foreign exchange instability and low yield relative to inflations.
He lamented the insufficient safety nets for poor and vulnerable households as well as the sub-optimal fiscal position, marked by high budget deficit.
The minister noted that to manage the transitory inflationary impact of ongoing reforms, the government is implementing a suite of social and economic interventions to support vulnerable households and SMEs.
He also said the country’s economic limitations were aggravated by insecurity, particularly the attacks on critical national infrastructure and food production.
He said as the economy begins to turn the corner, the government is focused on providing businesses and households with the necessary support required to weather the current economic challenges confronting them.
James Emejo
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