If elected, the All Progressives Congress (APC) Presidential candidate — Asiwaju Bola Ahmed Tinubu has vowed to combat what he called “imported inflation,” eliminate fuel subsidies, battle insecurity, and maintain a sound monetary policy to stimulate the country’s economy.
Under the auspices of the Nigerian Economic Summit Group (NESG) yesterday, Tinubu addressed this as he presented his economic strategy to the organised private sector
The former Lagos State Governor said: “To achieve the economy we seek, we must resolve the pressing security issues. No nation can flourish with terrorists and kidnappers in their midst.
“My core belief is that the private sector must be the prime driver of economic progress. However, the government establishes the framework within which the private sector must operate. If that framework is sound, the private sector will flourish. If the framework is frail or incomplete, then the private sector will struggle.”
On tackling inflation, he said: “I do not hold to the mainstream view that all forms of inflation are best tackled by interest rate hikes and shrinking the economy. Supply-induced inflation does not lend itself to this harsh medicine, just as one does not cure a headache by plucking out one’s eye.
“I do not embrace the conventional wisdom that fiscal deficits by the national government are inherently bad. All governments, especially in this era of fiat currency, run secular budget deficits. This is an inherent part of modern governance. The most powerful and wealthiest governments run deficits, as do the poorest nations.
“A budget deficit is not necessarily bad. Look at the Japanese example with high government borrowing and low inflation. The real issue is whether deficit spending is productive or not. Unproductive deficit spending is a compound negative. Especially if backed by excessive borrowing of foreign currency. This is not classroom economics but it is the lesson of the real economic history of nations.
Furthering on the removal of fuel subsidy, he added: “It is based on this idea that I believe we must remove the PMS subsidy immediately. It has outlived its shelf life as a public good. We will neither subsidize neighbouring countries’ fuel consumption nor allow a select few to reap windfall profits and hoard products.
“And the subsidy money will not be ‘saved’ because that means elimination from the economy. Instead, we will redirect the funds into public infrastructure, transportation, affordable housing, education and health, and strengthen the social safety net for the poorest of the poor, thus averting increased security challenges.
“Fiscal policy will be the main driver. Monetary policy is weaker and a less effective instrument. Bad monetary policy is, of course, destructive. But even good monetary policy cannot carry the load the fiscal arm can. Thus, we must steadily remove ourselves from the fiction of tying our budgets to dollar-denominated oil revenues.
“This is effectively pegging our budget to a dollar standard. It is as outdated as the fuel subsidy itself. It is also restrictive and ties the economy to slow growth. Just as the common man must mentally sever the cord to the subsidy, the elite must sever the cord to this artificial fiscal restraint,” he added.