Rewane, Kale Urge FG to Reset Macroeconomic Policies

Fasua restated that while current policies of the government may bring about hardship, they would ultimately pave the way for future growth.

Fasua stated this at a virtual Economist Conference organised by Proshare, where discussions centered on the theme, “Policy Crossroads: The Choice between Strangulation and Expansion.”

He emphasised the importance of assessing and reassessing the crucial policies of fuel subsidy removal and currency floatation, both implemented weeks apart.

During the conference, Rewane, stressed the need to bring in competent people to steer economic policies amidst ongoing challenges, while Kale underscored the need to reset macroeconomic policies.

Fasua said: “We are actually at a crossroads, but it points to growth from where I see it. And it also points to a number of behavioral changes that we must now begin to embrace. And so, I don’t see despair. I think that it’s natural for people to be apprehensive but the government has only been in for nine months or thereabout.

“So, from where I see it, I see a scenario where we will be able to turn things around and I see a scenario where already, things have actually been done right to a large extent. Of course, there may be a couple of mistakes here and there, people will talk about fiscal governance, fiscal prudence, and so on. I think we’ve been fairly prudent in terms of fiscal management.”

He recommended the need to consider alternative approach rather than contemplating the reversal of the two primary government policies and called for their re-evaluation.

He said: “I will probably urge that, contrary to thinking about the reversal of the two key policies that the government has done, which is first of all the petrol subsidy removal, which seems to be coming back now as a result of the drop in the value of the Naira. I’ll say that this is the time to assess and reassess some of these policies.”

On his part, Rewane stressed that the federal government has to act immediately to assess policies being implemented.

He said: “We are not really at a crossroads, but we are at the point where you’re damned if you do, you’re damned if you don’t, but if you do nothing, you are bound to crash, If you do something you are likely and there’s a likelihood that you might succeed. So there are no guarantees that any particular set cocktail of options will take us out.

“And I don’t think that we need new policies. I think we need institutional reform to ensure that those policies are impactful. If you’ve decided that you are going to reduce subsidies, you’re going to deregulate the foreign exchange market and make it more efficient, then institutional reform to support those policies, to make sure that the impact is felt positively and intervening when you’re getting unintended consequences. Policies don’t need to be changed; policies are okay. The understanding of how your economy is structured, and how you’re going to apply the sequencing of these things are what is important.”

He emphasised that the individuals in positions of authority responsible for implementing the policies may not be the most suitable for the roles, saying there was a clear need to bring in the most qualified and capable individuals to guide and execute effective economic policies.

He said: “There is need for competence. I’ve seen a lot of appointments that have been made very interesting. Either you equip them with the tools or you can change some of the people so you can get people who can deliver quickly. I’m not indicting the people selected, but we are in the knockout stage in a tournament and still using our third and fourth eleven.”

For his part, Kale said: “So I think it’s even a case where we have to turn around and go back and probably have to reset, I think it’s more of a resetting of the Nigerian macroeconomic system.

“Also, I think there’s a lack of understanding in the way the Nigerian economy is structured. I think we’ve gotten to a point where every part of the macro-economy, whether it’s fiscal, whether it’s the real sector, the external or monetary sector is constrained.

“It has gotten to a point in my opinion, where it’s difficult to say this is the first issue to tackle because they’re all equally important, they are all very significant in the Nigerian economy and tackling one on its own in isolation is going to hit the other one.”

He noted that the need for coordination between the fiscal and monetary policy authorities to achieve inclusive growth.