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MemberSeptember 19, 2021 at 10:51 am
From Isaac Anumihe, Abuja
As part of measures to stem the devaluation of the naira against major international currencies, reduce poverty and excess liquidity, the Central Bank of Nigeria (CBN) should avoid the creation of new money, according to Mr Eze Onyekpere, lead director of a non-governmental organisation and knowledge institution
He added that the apex bank should directly allocate foreign exchange earned from crude oil sales to the three tiers of government.
Speaking to reporters in Abuja, Mr Onyekpere said that monetary policy should target a single, unified market-clearing exchange rate for the naira in the medium term.
According to him, the Medium Term Expenditure Framework (MTEF) should contain attainable targets and strategies on the creation of employment, reduction of the trade deficit and improvements in capital importation.
On the contentious fuel and electricity subsidies, the economy expert said that the two policies should be discontinued to create the fiscal space for funding of infrastructure and other national priority projects.
However, the prosecution of persons who contributed to the rot in the sectors should be undertaken expeditiously while savings in the cost of governance and removal of subsidies should be channelled to capital expenditure in critical infrastructure backed by a cost-benefit analysis.
According to him, to contain the rising incidence of debts, the government should implement schemes requiring the conversion of tax concessions into a refundable tax credit.
‘Tax expenditures should be capped as a percentage of overall actual and collectable tax. It is recommended that not more than 20 per cent of the available tax revenue be foregone as a tax expenditure. The opportunity for the review of extant tax expenditures is provided by the annual Finance Act and the 2021 Finance Act should be the first,’ Onyekpere, said.
Alluding to the Auditor General for the Federation’s annual reports, Onyekpere also suggested that urgent measures are imperative for the recovery of sums due to the Federation Account and the federal government.
In his opinion, special procedures and court proceedings leading to the recovery of the outstanding sums should be devised.
‘Federal Government should consider setting prudential limits like debt service/revenue ratio to ensure the sustainability of federal government’s debts. It is recommended that in the medium term, debt service should not exceed 50 per cent of retained revenue,’ he said.
Suggesting alternative measures to reduce direct sovereign borrowing including borrowing for government-owned enterprises (GOEs), the Lead Director said that Public-Private Partnership (PPP) of the Medium Term Expenditure Framework (MTEF) should be mainstreamed and a list of candidate projects prepared with a realistic timeline for implementation.