Economic recovery: CBN, finance ministry, others meet to harmonise monetary, fiscal policies

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For the first time since the present administration assumed office, both the monetary and fiscal authorities met over the weekend to find a common ground on a number issues to move the economy forward.

Godwin Emefiele, CBN Governor
Godwin Emefiele, CBN Governor

The Central Bank of Nigeria, CBN represented the monetary authorities, while the fiscal authorities included the Ministries of Finance, Budget and National Planning as well as Trade and Investment.

The came together over the weekend to harmonise their policy perspectives towards building a monetary and fiscal collaboration to reverse the negative trend in the economy.

Last September, Finance Minister, Kemi Adeosun, and CBN governor, Godwin Emefiele, canvassed opposing views on the best way to grow the country’s economy out of recession in a manner financial experts and economists saw as a crack in President Muhammadu Buhari’s economic direction.

While Mrs. Adeosun wanted a cut in the benchmark interest rate by banks then at 14 per cent to support government stimulus plan to borrow cheap funds locally and boost productive activities to bail out the economy, Mr. Emefiele thought otherwise, opting for the Monetary Policy Committee (MPC) to retain same.

The apparent lack of consensus among members of the government economic team was blamed on the absence of cohesion on the way to guide the economy out of recession.

But, speaking at the opening of the two-day Monetary Policy Committee (MPC) retreat at the CBN Corporate Headquarters in Abuja on Friday, Mr. Emefiele underscored the need for the country’s monetary and fiscal authorities to collaborate and harmonize standpoints to ensure the rapid development of the economy.

The retreat was on the theme: “Pathway to Price Stability Conducive to Economic Growth.”

Mr. Emefiele, who also chairs the MPC, noted that for the retreat to record such a large attendance of the fiscal authorities showed a commitment to tackle the current serious economic challenges the country was facing.

The CBN said finding a sustainable solution to the current economic problems required a broad participation of representatives from the fiscal side of the divide.

He said the retreat, as a brainstorming session, would provide perspectives on certain MPC decisions and close the gap on the coordination between monetary and fiscal authorities to chart a common course and decisions to develop the economy.

The Minister of Budget and National Planning, Udoma Udoma, said both the monetary and fiscal authorities had no choice, but to work together to guarantee the country’s economic growth.

Mr. Udoma said that the pathway to lower interest rate was to ensure monetary and fiscal authorities collaboration with the private sector.

On their part, the Minister of Finance, Kemi Adeosun, and her Industry, Trade and Investment counterpart, Okechukwu Enelamah, both agreed that solving challenges facing the Nigerian economy required unconventional tactics.

Mrs. Adeosun said the country still had a huge population of unbanked Nigerians whose contributions to the economy were hardly captured, pointing out that government must devise ways to bring them into the financial mainstream.

She also hinted that, based on the current realities, the federal government would have to borrow more to meet its infrastructural obligations.

On the other hand, Mr. Enelamah emphasised the need for both monetary and fiscal authorities to ensure business, market and investor confidence, as well as policy integrity, in order to improve on the ease of doing business in Nigeria.

The Deputy Governor, Economic Policy, CBN, Sarah Alade, in her presentation entitled: “The Macroeconomic Trilemma and Monetary Policy in Nigeria,” said the onus of achieving the trilemma of low interest and exchange rates as well as low inflation should not entirely be the function of the monetary authority.

Rather, Mrs. Alade said collaboration with the two authorities was necessary if the country was desirous to see any meaningful change in the economy.

“There is need for deliberate policies to ensure stability and engender growth in the economy,” Mrs. Alade said.

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