CPPE: Fiscal support urgent to compensate for impact of extreme monetarism

The Centre for the Promotion of Private Enterprise has emphasized the urgent need for fiscal policy support to counteract the adverse impact of extreme monetarism on the Nigerian economy. The organization expressed concerns regarding the recent Monetary Policy Rate (MPR) hike by the Central Bank of Nigeria, noting that previous rate increases have been overly aggressive, leading to negative implications for output and real sector investments. Muda Yusuf, Director at the Centre for the Promotion of Private Enterprise, highlighted the challenges posed by the current monetary policy stance and emphasized the importance of exploring alternative measures, particularly on the fiscal front, to support production and productivity. The call for urgent fiscal support comes in the wake of the fresh MPR hike, which has raised concerns about the affordability of funds and its ramifications for economic growth and entrepreneurship. Yusuf underscored the significance of addressing key issues such as inflation, exchange rate depreciation, and credit access for sector operators and borrowers in the economy. He highlighted the disproportionate impact of aggressive monetary policy measures on businesses and emphasized the need for a balanced approach that considers the welfare of entrepreneurs and the real economy. The Director stressed the importance of pausing on further rate hikes and called for a strategic focus on fiscal interventions that can bolster production and enhance loan asset quality. In proposing near-term priorities for fiscal authorities, Yusuf recommended an expansion of the development finance window to provide entrepreneurs with access to cheaper and longer-term funding. He cautioned against the suffocating effects of high-interest rates on investment and production, advocating for policies that support job creation and economic diversification. Yusuf also called for the revitalization of institutions like the Bank of Agriculture to address funding challenges in critical sectors such as agriculture. Regarding private sector initiatives like the Dangote refinery project, Yusuf emphasized the need for swift and efficient operations to mitigate energy costs and supply chain challenges. While acknowledging the potential impact of private sector-driven enterprises on inflation and production efficiency, he highlighted the importance of government support in facilitating a conducive business environment and reducing operational barriers for key industries. In conclusion, Yusuf underscored the critical role of fiscal measures in complementing monetary policy actions and driving sustainable economic growth. He stressed the need for targeted interventions to support key sectors, improve access to finance, and enhance production efficiency. As Nigeria navigates the challenges of extreme monetarism, the focus on coordinated fiscal and monetary policies remains instrumental in mitigating the adverse effects on the economy and fostering a conducive environment for business expansion and job creation.