Experts have appraised the effectiveness of fiscal and monetary policies of the Ministry of Finance, Budget and Planning , and the Central Bank of Nigeria , in tackling the country’s economic challenges and found them to be inadequate due to lack of coordination between the two.
The fiscal approach is anchored by the Federal Government whose role is mainly to moderate the excesses of other operators in the economy, and provide law and order and enabling operating environment. “The reverse should be the case, as monetary policies should be in the lead. Then we can see a much better direction in the running of the economy.”
However, this aberration is an unusual norm, as the monetary authority makes incursion repeatedly into the economic policy territory hitherto exclusively reserved for the fiscal authority in Nigeria. While the three critical rates – exchange rate, inflation rate, and interest rate, must be managed in a manner to avoid public outcry, the CBN, which is saddled with this responsibility can only do this when the equation is balanced with effective fiscal support, especially if it doesn’t have to worry about the importation of what can be conveniently produced locally.
Furthermore, he said the CBN needs to be in the vanguard for faithful implementation of policy incentives for export promotion, import substitution and protection of infant industries, which implementation has been less than satisfactory. According to him, if the fiscal gap is not plugged, monetary policies may exist in vain, thereby propelling intervention by CBN in formulating both fiscal and monetary policies. He said: “Nigerians have now seen the indolence of the fiscal authority and gotten accustomed to seeing the CBN play both roles. Even the fiscal authorities believe that CBN is better suited to making both fiscal and monetary policies that galvanize the economy.
“People should not be deceived in thinking that the external borrowings are to support the economy. Rather, the federal government is using them to finance the wars, and in reality, major portions are embezzled by government officials.”