· 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.