'Fiscal prudence, austerity will reduce cost of governance'

Experts have listed fiscal prudence and some form of austerity as measures that would help to reduce the cost of governance and create more legroom for the capital projects that would leapfrog the economy.
Afrinvest Securities Limited, while suggesting policy actions that would enable the country to fully realise its reform benefits, said that the federal government must guard against reform fatigue so that the current processes would not suffer setbacks.
The experts added that policies should focus more on key areas that would affect growth and productivity in the economy. On the FG’s Conditional Cash Transfer Programme targeted at 15 million vulnerable households has reached 1.5 million, with five million coverage expected this year, the analysts urged government to consider the viability of boosting social goods such as mass public transport schemes and cheaper-to-access quality community health schemes.
According to them, the programme would have more impact on productivity and the populace than cash transfers. The analysts stated that the outlook for December is upward biased, despite the removal of the FX-access ban on 43-items and declining global inflation.
“We expect seasonal goods and services demand due to the festive season to contrast the subdued harvest season.
“In addition, continued currency depreciation (-7.7 per cent month-to-date) and a higher rate for cargo clearance (from ₦783.17/$ to ₦951.94/$) should be pressure points in the month.
“Thus, we forecast a 2.9 per cent and 2.2 per cent m/m growth in farm and non-farm prices respectively. This projected uptick across the CPI components implies headline inflation of 2.6 per cent m/m and 29.3 per cent y/y.” Looking ahead, the analysts said foreign exchange (FX) liquidity conditions would remain tight, pending receipt of expected FX inflows.
“Thus, we expect the pressure on the local currency to persist in the near term. Nonetheless, we expect foreign investors to keenly watch the development in the FX space with regards to the expected FX inflows as guided by the authorities, CBN’s recent actions in clearing its FX backlogs, and firm direction of short-term interest rates.”