The coronavirus has changed the modern world with a velocity un-foretold. To protect their populations, nations have taken unprecedented steps in closing down cities, halting socio-economic activities and quarantining vast numbers of people.
The global economy has turned against us. Oil prices have steeply fallen. The price may rebound but not nearly enough to return to customary levels. The resultant revenue loss impairs the naira exchange rate.
The CBN can lend large amounts of virtually non interest loans to these firms with the proviso that the companies maintain their existing payrolls.
If we must hold to the restrictive public health measures, the people will need economic relief.
Recessionary forces outweigh inflationary ones at this time. The agricultural sector mostly intact but hurt in part. The service and manufacturing sectors have been weakened and urban employment severely battered.
- SUSPEND/AMEND 5 PERCENT DEFICIT LIMIT OF THE FISCAL RESPONSIBILITY LAW.
The Fiscal Responsibility Act prohibits fiscal deficit of more than 5 percent of GDP.
The first myth is the belief that national govt fiscal deficits are always harmful.
With the fiscal latitude provided by lifting the budgetary limit, government can render emergency sustenance relief to most Nigerian households, especially the recently unemployed, via cash payments.
To maintain adequate supply of food and ensure price stability, government should re-establish commodity boards for strategically important crops. These boards will specify a guaranteed minimum-maximum price range for these crops.
The CBN should lower interest rates to single digits. This may spur some private sector and will lower the charge on government deficit spending. To ensure the health of commercial banks, CBN should give liberal access to its discount window...