A popular economist, Paul Alaje, yesterday insisted that the removal of subsidy from petroleum and the devaluation of the naira is a huge mistake made by the federal government which has worsened the country’s economic woes.
He stated that the policies should not have been made together, insisting the two cannot work in a developing economy like Nigeria.
He also warned that the reduction of debt service to revenue from 98 per cent to 69 per cent as recently revealed by Minister of Finance, Olawale Edun, is nothing to rejoice about, noting that the ratio could return to 98 per cent without improving on revenue generation.
Alaje spoke in Lagos during the 3rd Annual Mohammed Fawehinmi lecture and second scholarship award with the theme, ‘The Impact of Local Government Autonomy and the Minimum Wage on the Masses’.
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He noted that Russia, prior to the Vladimir Putin presidency, embarked on the two policies and its economy suffered great depression. He listed other countries like Argentina which toed the same line and it economy is never the same again.
According to him, it is double jeopardy to remove subsidy when domestic fuel supply cannot be guaranteed.
Alaje also stated that the government should have benchmarked the naira against the dollar at a reasonable rate instead of allowing the currency to float.
“Currency is everything. When you devalue, in the elementary economy they said money is a medium of exchange. But the real definition of money is a measure of worth.
“How can you open your eyes and devalue your own self and devalue your life? You can only do that on one condition. If you are using the dollar as a globally acceptable international currency and you have it in bulk, then when you devalue your local currency that means you are richer.”
In proffering solutions, Alaje called on the president to peg the naira to around N900 to one dollar, reduce the cost of governance and deepen transparency in project management. “When we say people should tighten their belt, our own debt must be fastened,” he stated.
Another speaker, Comrade Ayodele Adewale, said the subsidy removal became imperative in view of the corruption in its management.
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