CISLAC urges accountability in Nigeria economy

The Civil Society Legislative Advocacy Center (CISLAC) on Thursday, stated that rising debt profile and inflation are the causes of economic turbulence Nigerian , urging both fiscal and monetary authorities to put their act together to tame it.

Auwal Ibrahim Musa (Rafsanjani), Executive Director, CISLAC, while presenting a paper on; ‘Nigerian National Debt: More of an Accountability crisis than economically induced issues’ during the media interaction at the ongoing IMF/World Bank Annual meeting in Washington DC, said Nigeria’s debt profile and rising inflation have defiled all economic prudence frameworks that exist in the laws.

The CISLAC’s boss, who is also Head of Transparency International in Nigeria, advised Central Bank of Nigeria (CBN) that it “must act resolutely to bring inflation back to target, keeping inflationary pressures from becoming entrenched and avoiding de-anchoring of inflation expectations that would damage credibility”.

He noted that the high uncertainty clouding the nation’s economic outlook hampers the ability of policymakers to provide explicit and precise guidance about the future path of monetary policy.

“But to Nigerians, clear communication of both the fiscal and monetary authorities about their policy reaction functions, their unwavering commitment to achieve their mandated objectives, and the need to further normalise policy is crucial to preserve credibility and avoid unwarranted market volatility”, he said.

According to him, the budget estimate as contained in the bill the President presented on October 7, 2022 as 2023 Appropriation bill to the National assembly to the tune of N20.5trn with an expected revenue of N9.7trn and expected (additional) borrowing to the tune of N8.8trn , if it scales through, Nigeria’s debt stock will be at N50.8trn.

“This is not just worrisome, but also scary considering the state of our economy that we are already in. This situation looks like nothing else than escalated poverty and exacerbated austerity”, he said.

He emphasised that where appropriate, “our policy makers could consider using some combination of targeted foreign exchange interventions, capital flow measures, and/or other actions to help smooth exchange rate adjustments to reduce financial stability risks and maintain appropriate monetary policy transmission”.

 

“They should enhance efforts to contain risks associated with their high debt vulnerabilities, including through early contact with their creditors, multilateral cooperation, and support from the international community.

“Enacting credible medium-term fiscal consolidation plans following the recent shocks could help contain borrowing and refinancing costs and alleviate debt sustainability concerns”, he added.

He specifically said: “Our policymakers should contain further buildup of financial vulnerabilities, adjust selected macro prudential tools as needed to tackle pockets of elevated vulnerabilities.

“There is an urgent need to striking a balance between containing the buildup of vulnerabilities and avoiding procyclicality and a disorderly tightening of financial conditions is important given heightened economic uncertainty and the ongoing policy normalisation process.

He, however, said: “Implementation of policies to mitigate market liquidity risks is paramount to avoid possible amplification of shocks. Supervisory authorities should monitor the robustness of trading infrastructures and support transparency in markets. In addition, improving the availability of data at the trade level would help with timely assessment of liquidity risks. Given the increasing importance of nonbank financial institutions, counterparties should carefully monitor intraday activity and leverage exposures, strengthen their liquidity risk management practices, and enhance transparency and data availability”.

On extractive sector governance, he said: “The organised corruption in the oil and gas sector is a major issue that is expressed in several ways including oil theft and all other forms of sabotage within the trade value chain – fuel subsidy and other unproductive incentives.

“This trend has consistently left us in a situation where this revered sector is rather sapping revenue from the government instead of contributing substantially to fund developmental projects in Nigeria”.

 

 

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