FG can bring down inflation to 5 per cent next year if … Expert

An economist and CEO of Economic Associates (EA), Ayo Teriba has stated that the federal government can drive down inflation to five per cent in 2025 if it can attract a foreign direct investment of $50bn.

Teriba who was speaking on Arise TV’s Good morning programme said attracting such amounts would strengthen the naira, thus, having great impact on macroeconomic indices escalating Nigeria’s inflation figure.

He however said the current policies of the government are detrimental to achieving a lower inflation figure as current borrowing is done to pay off previous debt so it won’t solve the country’s economic woes.

He added that the interest rate given to Nigeria by institutions it borrows from is not encouraging due to the country’s credit rating.

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“5% inflation is possible next year. Look at what happened in Argentina. It is a question of what the government does. Economists don’t prophesise but make conditional statements that if the president can put the kind of efforts we are making on Tax and Finance Acts and make efforts to do an investment act to get $50bn FDI over the next one year, exchange rates will improve and inflation will go to single digit,” he said.

He added that the interest payments are the issue facing the country and there was hope that the current administration would have done something different to tackle it.

“They said they were not going to borrow but they have continued to borrow. There are right and wrong ways of borrowing, there are efficient and inefficient ways of borrowing. The foremost issue is the quality of the debt instruments that you issue and some countries of comparable size of our economy borrow more heavily than we do but they issue higher grades but borrow at a third of the rate at which we borrow.

“We borrow at some of the highest rates in the world whether domestically or abroad so we shouldn’t create the impression that it is about whether you should borrow or not borrow.”

“We should not continue to fund deficits year in year out with debt. If you look at your balance sheet you think you should have debt as a possibility, it should be equity,” Teriba added.