AfDB says Nigeria needs to synchronize fiscal, monetary policy

President African Development Bank Dr.  Akinwumi Adesina said on Monday in London that Nigeria needs to coordinate its fiscal and monetary policy more closely.

According to reuters’ report monitored by Business247 News Online, “I think the naira is devalued, but…monetary policy and also the fiscal policy that synchronisation, that is very very important,” Adesina said during a panel discussion at the FT Africa Summit in London.

“There is a lot of pressure put on the naira, ” he stressed.

It would be recalled that AfDB  said that between 2016 and 2017, it would provide a package of $4.1 billion to step up social infrastructure, boost agriculture and improve electricity.

Also the bank expressed its resolved to inject a sum of $1 billion to emancipate Nigeria from its current economic woes.

The funds were to essentially cushion the deficits recorded in the N6.04 trillion 2016 budget.

Adesina gave the revelation after a meeting between the bank and the Economic Management Team chaired by Vice President,  Yemi Osinabjo at the presidential villa, Abuja.

Adesina noted that it was important the bank came to the rescue of the country which he said was the largest stakeholder.

Adesina who was Nigeria’s former Minister of Agriculture in the immediate past government of former president Goodluck Jonathan assured that by 2019, AfDB would have increased its financial portfolio to Nigeria to the tune of $10 billion.

“I think the times are difficult. There is no doubt about that but I want to commend the government for being bold in taking the right decisions. I think that the fact that the price of crude oil has gone down is a big challenge because you have 98 percent external forex revenue coming from the sector.

“So, it has created calibrations. I’m not going to go into the details of all the problems but what is important is that what are we going to do about it? I’m not here to lecture Nigerian government. I’m here to support very strongly. We have said that we are going to support the Nigerian government with the budget support to be able to deal with some of fiscal imbalance that they have. We are looking to consider for an award $1 billion to help to deal with that particular deficit.

“In addition to that, there are other challenges that the economy has which is in terms diversifying and deepening the level of diversification in critical sectors. So, agriculture, solid minerals, manufacturing as well as industrial sector is very important. So the bank is going to provide in total between 2016/2017 $4.1 billion to Nigeria in various of power, infrastructure to agriculture and for the private sector the SMEs financing and lending.

“I expect that our portfolio in Nigeria will not decrease. It will actually grow. We expect to invest in Nigeria by 2019 a total of $10 billion. Offering some economic advice to the government, the AfDB president urged the government to ensure that the macro policies were in sync with monetary policy and also the fiscal policy side of the economy to bring about a sustainable diversification programme.

He explained that what bedevilled Nigeria at the moment was liquidity problems and not debt crisis, giving a ray of hope that Nigeria would come out of the economic woods stronger.

Adesina added: “So, let me just say that the issues that we think are important is the need to further deepen the diversification of the rest of the economy, also to make sure that the macro-economic stability as well as fiscal stability in the country. We have asked for the need for better synergies between the macro policy side and monetary policy side and also the fiscal policy side of the economy.

“We also recognize that power is perhaps the most important challenge that is driving inflation in the country. So, we expect in our portfolio this year to invest a total of 1.400 megawatts of projects to focus on the energy sector and by 2017 we plan to invest in 1,387 megawatt of project for the sector.

“We discussed with Vice President and minister of finance about how to invest in areas of women and youths employment in the country as well as to look for opportunities to support access to finance by supporting the Development Bank of Nigeria (DBN) with $500 million which will help to provide cheap financing for the real sector that the country wants to grow. We are also providing $100 million to the Bank of Industry (BoI) to be able to lend to small and medium size enterprises.