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Economic Confidential,
November, 2009
FEATURES
Bridging the Development Gap on Positive Signs
By
Remi Babalola
The
global economy is starting to show some positive signs of
stabilizing. The pace of global economic contraction is slowing and
the optimist in all of us would like to think that the worst of the
economic crisis may be over. We must be cautious, however, since
this may just signal the beginning of a sustained recovery. The
world economy is still challenged. It is important to note that the
key drivers of recovery - USA, Japan and European economies- are yet
to bottom out. The outlook for our country is particularly
encouraging. The Nigerian economy is poised for strong recovery
hinged on the surge in oil production, crude price rebound as well
as accommodative monetary policy.
Bonny light price has increased 70%, year-to-date closing at $79 per
barrel. Our production level is improving and gradually approaching
our OPEC quota level. The major risk and binding constraint to our
economic buoyancy in the short-run is the contraction of the credit
squeeze. We therefore call on our deposit money banks to resume
prudent lending immediately as their pivotal role in bolstering the
economy cannot be overemphasised. The automatic fiscal policy
inherent in our budgetary system and discretionary fiscal stimulus
from excess crude releases cannot replace financial intermediation.
It is only lending activities to small and medium enterprises that
can engender growth for the real sector in the long-run and not an
unsustainable fiscal stimulant.
Much of the burden in form of a policy response to this global
economic crisis fall on our fiscal policy. We have increased
government expenditures in the areas we considered fiscally
sustainable at this trying times to ameliorate the situation.
However, we all need to adopt some strategic structural reforms to
help the various tiers of government sustain economic recovery over
the medium term and when combined with our expansionary fiscal
policies they will help to protect those of us who are most
vulnerable. However, even with the best response now, the lagged
effects of our action mean economic recovery could take some time.
The Report of the Retreat of the
Post-Mortem Sub-committee has been
stepped-down several times due to certain unforeseen exigencies. At
our last meeting, we resolved to take the report at this meeting. It
is our belief that members should have time to peruse and dimension
the report so that we can implement agreed recommendations.
Permit me once again at the risk of repetition to reiterate that,
without prejudice to the discussions on the report there is the need
for us to consider issues concerning the composition, terms of
reference as well as the tenure of the membership of the
sub-committee. The institutionalization of the succession process is
necessary for an all-inclusive and very representative sub-committee
of this nature.
Although these are challenging times, they are also times of great
opportunity. Today, even in the midst of the challenges we are
facing, we must take the opportunity to ensure the next wave of
growth is more inclusive to accommodate all Nigerians. Investment in
infrastructure, institutions, the environment and basic health and
education, combined with greater cooperation and integration, will
help make that happen. I believe we can all rise to the challenge
and build a stronger, stable, more equitable and more prosperous
future, with opportunities to participate in and benefit from growth
extending to all our citizens.
Remi Babalola is Nigeria’s Finance
Minister of State
A
delivered this paper at FAAC Meeting in November 2009
Abuja |
