By Chinyere Joel-Nwokeoma
An Economist, Prof. Sheriffadeen Tella, on Tuesday said that the Central Bank of Nigeria (CBN) must pursue monetary or quantitative easing approach in 2017 to revitalise the economy and solve the country’s lingering foreign exchange crisis.
Tella, Professor of Economics, Department of Economics, Olabisi Onabanjo University, Ago-Iwoye, Ogun, made the assertion in an interview with the News Agency of Nigeria (NAN) in Lagos.
He spoke on ways to tackle the country’s lingering foreign exchange crisis in 2017.
According to him, the CBN must adopt monetary or quantitative easing whereby it buys financial assets from the private sector to stimulate the economy through private sector spending.
Tella noted that adoption of quantitative easing would return inflation to its target level.
He added that the apex bank should bring down monetary policy rates and lending rates to bring the economy back on track.
Tella said there was a need for temporary restrictive policy on some imports until domestic production improves towards the end of the second quarter of the year if the 2017 budget implementation commenced in time.
He also called for early passage and commencement of the capital aspects of the 2017 budget to create employment and production.
“There is still a large amount of Naira in the economy to fund speculative activities and those who have such money can buy foreign currency at any rate since it does not cost them anything.
“If the EFCC checks transactions on the accounts of those big politicians, it will see that the accounts have not been quite active but they are spending money for daily transactions.
“So, where are they getting the money they are spending on daily needs, acquiring property, refurbishing existing property or paying their workers?
“On the exchange rate, I predicted before that the Naira will reach N500 to a dollar by the end of this year and we are there now,’’ Tella said.
He attributed the development at the foreign exchange market to speculative attack on the nation’s currency.
Tella noted that colour swapping of the Naira was still an option to reduce speculative attack on the currency.
“The reasons are based on activities of speculators, largely those who have stockpiled Naira at home and converting same to foreign currency and for which I advocated change in or swapping of colour of N500 and N1,000 notes.
“It has never taken place, though India did it lately due to the same condition we have here,’’ Tella said.
He added that lack of production in the economy due to high interest rates and continuous capital outflow through importation and over invoicing or capital flight contributed to development in the forex market.