The Daily Trust Board of Economists has advised the federal government to improve its economic coordination and synergy, brace up in fighting corruption and find options for the proposed N6.2 trillion petrol subsidy for the 2023 fiscal year.
According to a communique issued after its second quarter meeting at the weekend, the Board said: “The government must improve coordination and synergy while bracing up to fight corruption head-on, ensuring there are consequences for actions by heads of ministries, departments and agencies (MDAs).”
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While it commended the Gross Domestic Product (GDP) performance in the first quarter of 2022, it stated that the growth trajectory is slow and below the level that will put the economy on sustained recovery, especially with a high unemployment rate of 33.3%.
The board noted that despite raising the Monetary Policy Rate (MPR), inflation is rising, seeking synchronisation of monetary, fiscal and trade policies.
The board also advised the government to probe the cause of the rising inflation including insecurity and energy crisis, adding that the Ukraine war is negatively impacting the energy crisis adding to the multiplier effect of imported inflation.
On the proposed 2023-2025 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF & FSP), the board said funding issues may worsen with the N6.72 trillion petrol subsidy and advised to look at how other countries raise funds from petroleum taxation, along with gradual subsidy removal.
“The board noted that the government cannot devalue the currency while deregulating the petroleum subsector at the same time because they both had serious contraindications, leading to a downward spiral,” the communique stated.
It urged the Federal Executive Council to focus on performance management and targets by ministers and appointees; contract awards should be left for the National Council on Procurement; the Office of the National Economic Adviser should be strengthened, operating from the Office of the President.
On tackling issues like exchange rate, dollar scarcity and the impact of skyrocketing cost of fuel on the cost of production, the board said unless Nigeria increases domestic production and value-addition, the currency would continue its decline.
The board lauded the recent commercialisation of NNPC Limited but advised that it should quickly complete the fixing of refineries and raise local production of petroleum products to cut petrol subsidy and boost energy supply.
“As long as there is no local production of petrol, total removal of subsidy will be a very risky venture,” the communique stated.
The board noted the rising public debt stock and higher debt service in the first quarter as it discouraged further borrowing but recommended improved revenue and financial management, a review of policies and laws for Public Private Partnership (PPP).
The board also said discussions on elections so far are not issue-based, focusing largely on regional and religious tendencies. It, therefore, urged aspiring leaders to be made public and should focus on security, economy, and other critical existential issues that the nation is grappling with.
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