According to the economic and private sector think tank, the
administration of Bola Tinubu needs to promptly deploy these measures to
address the social outcomes of its recent reforms, especially the inflationary
pressure induced by the fuel subsidy removal.
It stated that urgent measures need to be put in place to
mitigate the soaring cost of living and the escalating operating and production
costs, especially for businesses.
The Director/Chief Executive Officer, CPPE, Dr Muda Yusuf,
stated this in the centre half-year economic review.
He said, “The Tinubu administration needs to promptly deploy
measures to mitigate the current headwinds inflicted by the current reforms.”
“The interventions should be a mix of direct interventions,
tax incentives for low-income employees and small businesses, reduction in
import duty on some critical intermediate products for key sectors of the
economy, import duty concessions for the transportation, health, power, and
energy sectors.
“The improved fiscal space created by the reforms should
make these mitigating measures feasible and they have to be implemented
urgently in order to give the current reforms a human face.”
He noted that inflationary pressures may intensify in the
near term, with the country’s exchange rate coming under pressure in the short
term as forex demand backlog exerts pressure on the official forex window.
He stated that this pressure is expected to ease before the
end of the year and would pave the way for an equilibrium exchange rate that
would be more tolerable and sustainable.
He explained that the Central Bank of Nigeria should
establish a sustainable intervention framework to moderate the volatility in
the forex market.
Yusuf, said, “With a better fiscal space, the outlook for
lower fiscal deficit, moderation in the growth of public debt, reduction in
debt service burden, and an improvement in the macroeconomic stability are very
positive.
All of these would impact on economic growth prospects in
the second half of the year.”
According to him, the recent reforms by the new
administration will chart a new and positive course for the economy which
should lead to recovery and growth. He noted that the Nigerian economy was
impacted by the ongoing Russian-Ukraine war which continues to exacerbate energy
costs and fuel global inflation; the persistent monetary tightening in the
advanced economies; and the worsening geopolitical tension triggered by the war
in Ukraine.
Yusuf added that the tightening of global monetary
conditions is making access to global capital costly and difficult for
developing economies, triggering global capital flow reversals from emerging
economies.
He asserted, “On the domestic front, the major headwinds to
growth were the naira redesign policy of the central bank, persistent dysfunctional
foreign exchange policy, the political transition processes, weak recovery of
oil production, and the intractable challenge of insecurity in parts of the
country.”