The Federal Government has taken a corrective step to revitalize the Nigerian economy that has encountered severe complication in recent times.
With the 2016 budget now passed by the National Assembly and a N3trillion war chest, the government of President Muhammadu Buhari says it is set to take on the struggling Nigerian economy and is promising it will win.
Analysts said last night that the package and the stimulus budget would aid the growth in GDP that has been experiencing slow growth.
Bola Agbola, executive director, Cashcraft Asset Management limited, said: “The resumption of spending by the Federal Government eleven clear months after inauguration of the government and three months into the new year, should reactivate the economy all things being equal. The fundamental issues of sagging imports and fuel scarcity may dampen the impact of the reflationary spending .
“The much awaited new foreign exchange policy should be released without further delay, as the existing huge gap between official and parallel market rates is not only fueling inflation but might be creating a cesspool of corrupt practices in the opaque foreign exchange allocation chain, which may not boost the image of the government.”
Johnson Chukwu, managing director, chief executive, Cowry Asset Management Limited, had last week told BusinessDay that, “The expansionary nature of the budget and the package will offset the negative effect of the contractionary monetary policies,”
According to Chukwu, “In a situation of slowing economy, the emphasis should rather be on stimulating the economy and addressing the structural impediments that are triggering the inflationary pressure. It must also be noted that without addressing the current challenges in the foreign exchange market, increases in interest rates will not lure investors, particularly foreign portfolio investors back to the Nigerian market.”
The president who is planning a number of town hall meetings to make his case directly with the Nigerian people, has come under attack for failing to halt the economic slide and for his insistence on applying outdated solutions to some of the country’s economic challenges.
Emboldened by the N3trn stashed away in the TSA purse, the government has already announced it will immediately reflate the economy with about N350bn in payment to contractors and many say while this will be helpful in oiling the economy, concerns will still continue about how to expand productivity in the economy, so as not to push up inflation.
The economy is still better defined with its debilitating foreign exchange shortage which is leading to declining factory activities and resultant job losses, with even the local manufacturing which the government hopes to promote being some of the worst hit.
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