In his detailed plan to tackle the economic crisis bedevilling the country, the presidential candidate of the All Progressives Congress, APC, Asiwaju Bola Ahmed Tinubu, has promised to halt what he described as ‘imported inflation;’ remove fuel subsidies; fight insecurity; and ensure good monetary policy to boost the economy, if elected.
Tinubu said this on Friday while rolling out his economic plan before the organised private sector under the aegis of the Nigerian Economic Summit Group, NESG.
According to Tinubu, security must first be prioritized if the country must experience economic recovery.
“To achieve the economy we seek, we must resolve the pressing security issues. No nation can flourish with terrorists and kidnappers in their midst.
“My core belief is that the private sector must be the prime driver of economic progress. However, the government establishes the framework within which the private sector must operate. If that framework is sound, the private sector will flourish. If the framework is frail or incomplete, then the private sector will struggle.”
Tinubu added, in a statement by his Media office, that his administration would immediately after getting to the office, urgently address fiscal, monetary, and trade reforms to effectively increase domestic production, thus serving to curb imported inflation and to ensure better macro-economic stability by accelerating inclusive growth and job creation across Nigeria.
To achieve this, Tinubu said he would be guided by some principles detailing how to tackle inflation, petrol subsidy and monetary policy.
“I do not hold to the mainstream view that all forms of inflation are best tackled by interest rate hikes and shrinking the economy. Supply-induced inflation does not lend itself to this harsh medicine, just as one does not cure a headache by plucking out one’s eye.
“I do not embrace the conventional wisdom that fiscal deficits by the national government are inherently bad. All governments, especially in this era of fiat currency, run secular budget deficits. This is an inherent part of modern governance. The most powerful and wealthiest governments run deficits, as do the poorest nations.
A budget deficit is not necessarily bad. Look at the Japanese example with high government borrowing and low inflation. The real issue is whether deficit spending is productive or not. Unproductive deficit spending is a compound negative. Especially if backed by excessive borrowing of foreign currency. This is not classroom economics but it is the lesson of the real economic history of nations.
Removal of fuel subsidy
“It is based on this idea that I believe we must remove the PMS subsidy immediately. It has outlived its shelf life as a public good. We will neither subsidize neighbouring countries’ fuel consumption nor allow a select few to reap windfall profits and hoard products.
“And the subsidy money will not be ‘saved’ because that means elimination from the economy. Instead, we will redirect the funds into public infrastructure, transportation, affordable housing, education and health, and strengthen the social safety net for the poorest of the poor, thus averting increased security challenges.
“Fiscal policy will be the main driver. Monetary policy is weaker and a less effective instrument. Bad monetary policy is, of course, destructive. But even good monetary policy cannot carry the load the fiscal arm can. Thus, we must steadily remove ourselves from the fiction of tying our budgets to dollar-denominated oil revenues.
“This is effectively pegging our budget to a dollar standard. It is as outdated as the fuel subsidy itself. It is also restrictive and ties the economy to slow growth. Just as the common man must mentally sever the cord to the subsidy, the elite must sever the cord to this artificial fiscal restraint,” he added.
Tinubu said his administration’s budgeting would be based on the projected spending levels needed to push the real annual growth rate above 10 per cent while reducing the unemployment rate, so that the economy can be doubled in seven years.
He added that to cater for the economic needs of the over 200 million Nigerians, his administration will expand the manufacturing base to provide jobs, and also create affordable goods and products for the population.
He added, “For our industries to thrive, they need inputs, many of which are agriculture based. The present Administration has invested heavily in agriculture, providing loans and expanding the country’s total area of cultivated land for crops, livestock and fisheries. We will also promote vibrant commodity exchanges that will guarantee minimal pricing for produce.