Vice President Yemi Osinbajo has said for Nigeria to avoid unnecessary drawbacks in economic planning, the Federal Government needs to create synergy between fiscal and monetary policy.
He stated this at the 3rd Ministerial Performance Review Retreat in Abuja.
The Vice President also warned against blanket import restrictions, noting that some imported items are needed in the manufacturing process just as he urged for coherence in government policy adaptation between MDAs to avoid conflicting policies.
Osinbajo said going forward, the country must also address its exchange rate management, noting that the exchange rate of the naira to convertible currencies continues to face significant downward pressures because demand substantially outstrips supply.
“That is just the reality. On one hand, we have tried demand management and rationing, which has not worked because fixing the price while the parallel market reveals a massive arbitrage merely creates the opportunity for massive rents. It will also compound the backlog of remittances for foreign businesses that want to repatriate their legitimate earnings,” he stated.
The vice president further pointed out that a more market-driven approach will be the best approach, adding that some price discovery within the context of a managed float is required.
“Some efforts at controlled price discovery that had been made in the past include the Foreign Exchange Market (FEM), Interbank Foreign Exchange Market (IFEM), various iterations of the Dutch Auction System (DAS), Wholesale Dutch Auction System (W-DAS), Retail Dutch Auction System (R-DAS). When people know how they can access foreign exchange competitively, this will boost confidence, and inward flows will increase,” he stated.
Osinbajo further stated that Nigeria must focus on value addition and productivity in the economy and also called for coherence and coordination for effective policy implementation, saying it is important for government policies to be coherent otherwise different parts of the government could end up adopting opposing policies.
