By Chioma Obinagwam
The synergy between Nigeria’s Monetary policy and it’s Fiscal policy is perceived as the panacea to solving the country’s currency (naira) woes, Rotimi Fakayejo, Chief Executive Officer (CEO) of Enterprise Stockbrokers PLC, said.
Speaking in a telephone interview with National Daily Newspapers, the CEO said that there is lack of synergy between the Monetary and Fiscal Policy in the country, hence, both systems need collaboration in order to tackle areas responsible for the scarcity of Forex, which has brought it’s weight on the naira.
“It is not Rocket science, there’s no synergy between the Monetary Policy and the Fiscal Policy. We need to look at what is taking our Forex. There should be a reduction in imports. If there’s a level of food sufficiency, then the fiscal policy can put high tarrif on imported goods that are produced locally,” Fakayejo stressed.
This reaction is, however, coming on the heels of the recent pleas by some stakeholders on the CBN to adopt a flexible exchange rate as a way of tackling the depreciating value of the naira.
An action which was refuted by the bank, who in a recent report published by one of the dailies said it would further weaken the currency, increase inflation and cause untold hardship to Nigerians.
Recall that following the outcome of the 254th Monetary Policy Committee(MPC) meeting where the Central Bank of Nigeria(CBN) retained Monetary Policy Rate(MPR) at 14 per cent, Cash Reserve Ratio(CRR) at 22.5 per cent, Liquidity Ratio at 30 per cent and Asymmetric corridor at +200 and -500 basis points around the MPR, stakeholders have been calling for a float of the exchange rate or a more flexible exchange rate.
A floating exchange rate is a regime where the currency price is set by the forex market based on supply and demand compared with other currencies. This is in contrast to a fixed exchange rate, in which the government entirely or predominantly determines the rate.
He noted that this can be achieved when government ensures steady supply of power by reducing the level of vandalisation at gas sources.
He said: “If the Generating Companies(GenCos) are supplying enough to the Distribution Companies (DisCos), then the cost of production will be reduced to the bearest minimum.”
The CEO further disclosed that the country’s Forex Reserves is greatly reduced by importation of Premium Motor Spirit(PMS) and that can be achieved by establishing functional refineries in the country.
He also pointed that there should be transparency at all levels of operation.
“I believe the present policy they’re running can be good, if they’re not yielding to pressure from the nooks and crannies. There’s the issue of arbitrage of funds by banks, which should be addressed.
There isn’t enough transparency. Moreover, the margin between the parallel market and the official market is too wide.”