The Centre for Promotion of Private Enterprise (CPPE) has urged President Bola Ahmed Tinubu’s administration to promptly deploy measures to mitigate the current headwinds inflicted by the current reforms.
This is following the removal of fuel subsidy which has seen the price of petrol rise to over N500 per liter in most parts of the country as well as the removal of foreign exchange subsidies which saw the value of the Naira plummet at the official market to around N800 per dollar.
In its second quarter review and outlook for the second half of the year, the chief executive of CPPE, Dr Muda Yusuf, noted that, the interventions should be a mix of direct interventions, tax incentives for low-income employees and small businesses, reduction in import duty on some critical intermediate products for key sectors of the economy, import duty concessions for the transportation, health, power and energy sectors.
According to him, “the improved fiscal space created by the reforms should make these mitigating measures feasible and they have to be implemented urgently in order to give the current reforms a human face.
“It is laudable that the Tinubu administration is charting a new and positive course for the economy which portends bright prospects for recovery and growth. Already, there are clear indications of elevated investors confidence, improvement in the government fiscal space, higher prospects of exchange rate stability in the near term, and positive expectations of better economic governance.
“The short to medium term outlook for forex liquidity is very good and prospects of increased inflow of capital is very bright.”
However, there is an urgent need to address the social outcomes of the recent reforms, especially the inflationary pressure induced by the fuel subsidy removal. Urgent measures need to be put in place to mitigate the soaring cost of living and the escalating operating and production costs, especially for businesses.
“Inflationary pressures may intensify in the near term, the exchange rate may come under pressure in the short term as forex demand backlog exerts pressure on the official forex window. But the pressure is expected to ease before the end of the year. This would pave way for an equilibrium exchange rate which would be more tolerable and sustainable. Meanwhile the CBN should put in place a sustainable intervention framework to moderate the volatility in the forex market.
“With a better fiscal space, the outlook for lower fiscal deficit, moderation in the growth of public debt, reduction in debt service burden, and an improvement in the macroeconomic stability are very positive. All of these would impact on economic growth prospects in the second half of the year.”
