Monday 27th March, 2017
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20% of Naira in circulation fake - CBN ex-Dep Gov

20% of Naira in circulation fake - CBN ex-Dep Gov

·    Cautions FG against increasing taxes
·    Presidency, MDAs vote N151.536bn for frivolous items – CSOs
 
A bombshell came on Monday from a for­mer Deputy Gover­nor of the Central Bank of Nigeria (CBN), Dr. Obadiah Mailafia, when he told the National Assembly that 20 percent of the total Naira notes in circulation in the country are fake.
At the opening session yes­terday in Abuja of a three-day public hearing on the 2017 Budget appropriation process in the National Assembly Com­plex, Mailafia lamented that it was unfortunate that the con­cerned authorities appear to be oblivious of the gravity of fake currencies in circulation on the economy.
 
 He spoke on the topic: “Public Finance in the Context of Economic Recession: Inno­vative Options.”
According to him, when fake currencies of that magnitude cir­culate in an economy, the original currencies become scarce, leading to “bad money chasing away good money.”
On the worsening economic situation, the former CBN chief declared that foreign investors’ confidence in the country showed that its exit from recession is feasi­ble if the right thing is done.
Mailifia said that investors’ knowledge of the huge economic potential of Nigeria accounted for the recent over-subscription of $1 billion Eurobond initiated by the Federal Government.
He described recession as a situation where the Gross Do­mestic Product (GDP) output falls more than two quarters.
Mailafia attributed the cur­rent recession in Nigeria to a myr­iad of factors such as the global fall in the prices of crude oil, dwin­dling foreign reserves, weaken­ing of the Naira, negative growth and the widening gap in public policies.
Other factors are poor bank­ing practices, stock market crisis, speculations, regulatory authori­ties’ failure, corruption and weak macro-economic management.
Mailafia, who was in charge of policy at the apex bank, rat­ed the United States of America (USA) depression of 1929 as one of the worst in world history and recalled that though the crisis was caused by stock market crash, it was compounded by the myop­ic nature of the then government which he said resulted in increas­ing interest rates instead of low­ering it.
He therefore warned the Fed­eral Government and financial regulators against toying with the idea of high interest rates because “it will compound the prevailing economic woes.”
The banker also cautioned against increasing tax and ad­vised the federal government to rather push for more income tax by getting more Nigerians to pay instead of increasing the rate be­cause it will stall growth and in­vestment.
He also narrated how the suc­ceeding government of Franklin Roosevelt rescued the situation by boosting consumption and build­ing infrastructure and appealed to President Muhammadu Buha­ri to stop giving excuses that his administration did not cause the recession, stressing that the buck stops on his table.
He asked the legislature and the executive arm of government to deploy the 2017 Budget to stim­ulate the economy, focus on fac­tors that can rejuvenate growth, stabilise the exchange and inter­est rates and provide a stimulus package that will ensure a syner­gy between the economic growth and budget package.
The former apex bank offi­cial said it was unfortunate that the CBN allowed the MMM ini­tiative to operate in Nigeria, a sit­uation which, he said, was detri­mental to a crippled economy in view of Nigerians’ gross involve­ment in the Ponzi scheme through withdrawal of monies in the banks and subsequent investments in the scheme. He described it as too risky for banking business.
He further advised the gov­ernment to reposition key insti­tutions, invest in infrastructure that can create employment to teeming youths on the streets, re­invent railway operations and re­duce taxation.
Also, while delivering a speech on “Key Challenges of Planning and Budgeting in Nige­ria: A Case Study of Social Safe­ty Net Programme Implementa­tion in Nigeria,” Dr. Nazifi Darma of the Department of Economics, University of Abuja, blamed Ni­geria’s stagnant economy on lack of development plans.
He said that India’s economy has been on steady progress be­cause the country has a history of consistent 65 years’ national plan­ning and canvassed the need to review the Vision 20:2020 blue­print which he said should be aligned with Sustainable Devel­opment Goals (SDGs).
Darma also echoed Maila­fia’s warning, as he said that “this is not the time to increase taxes. You can increase the number of people that will pay taxes.”
According to him, a five-year development plan should be drawn from Vision 20:2020.
In his presentation, the Min­ister of Budget and National Plan­ning, Sen. Udoma Udo Udoma, admitted that the 2016 Budget failed to achieve its set targets.
The minister, who was rep­resented by the Minister of State for Budget and National Plan­ning, Mrs. Zainab Ahmed, not­ed that the GDP growth fell from below 4.39 percent target to 1.55 percent; production volume from targeted 2.2 million to 1.81 mil­lion; inflation rose from project­ed 9.8 percent to 17.8 percent; exchange rate depreciated from projected N197 to $1 to N305/$ while revenue target of 3.8 per­cent only yielded 2.117 percent.
Udoma noted that this year’s revenue projection of N4.942 trillion is 28 percent higher than N3.85 trillion in 2016 with 11 per­cent projection on recovered loot; 4.9 percent, among others.
The Minister of Agriculture, Chief Audu Ogbeh, traced the fo­rex crisis to 1986 when Naira was first devalued by the military re­gime of Gen. Ibrahim Babangida, noting that since then, the Naira has been devalued annually.
 
 Meanwhile, a coalition of Civil Society Organisations (CSOs) led by Citizen Wealth Platform (CWP), said that it had uncovered a range of friv­olous and wasteful expenditure proposal in the 2017 Budget.
The group, which present­ed a graphic overview of the frivolous allocations in the budgetary proposals of the Presidency and MDAs, al­leged that a whopping sum of N151.536 billion had been al­located to such expenditures.
It appealed to the Nation­al Assembly to strike out such proposals which were con­tained in the 2016 Budget.

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