Expert urges FG to apply monetary, fiscal stimulus

An Economic Expert, Prof. Uche Uwaleke, has urged the Federal Government to apply both monetary and fiscal stimulus to tackle the current economic recession in the country.Uwaleke gave the advice in an interview with the News Agency of Nigeria (NAN) in Abuja on Monday.

He also urged the Central Bank of Nigeria to ease the monetary policies to enable small and medium enterprises (SMEs)get cheaper access to funds.

“A recession is primarily caused by weak aggregate demand and therefore the option is to apply both monetary and fiscal stimulus.

“The CBN should ease monetary policy by lowering the benchmark interest rate to enable cheaper access to funds, especially by SMEs.

“On the fiscal side, the federal government should move speedily to obtain concessional foreign loans that should be channeled into employment generating activities such as agriculture, solid minerals and infrastructure.

“Committed efforts in these areas will ultimately open up multiple streams of foreign exchange and strengthen the Naira in the process,’’ he said.

He said that any attempt to dispose viable government assets to temporarily shore up reserves, could create the wrong impression for the country.

Uwaleke said the state of the country’s economy had not degenerated to a level where government would sell off some of its assets as suggested by Alhaji Aliko Dangote.

“ I do not think the state of the country’s economy has reached the point where viable national assets such as the NLNG must be sold in order to generate revenue.

“If a country is in a liquidity trap to the point where the government loses the capacity to borrow, then a case can be made for the sale of non critical assets, at least to keep the government running.

“Nigeria is not in any liquidity trap and so the issue of selling performing national assets should not arise.

“The NLNG is not known to have posed any burden on government resources, as a matter of fact, the company has a record of regular dividend payments to the government.

“ So, why sell off the government’s majority stake in the company as has been suggested?” he queried .

Uwaleke explained that it was only a bankrupt state that sold national assets and Nigeria could not be said to be bankrupt.

He said that was the reason why government hoped to borrow from external sources, including issuing Eurobonds to revamp the country’s economy.

“Notwithstanding the high ratio of debt service to government revenue, the ratio of the country’s debt stock to GDP at less than 25 per cent, is within sustainable level and it is one among the lowest in the world,’’ Uwaleke added.