Association of Bureaux De Change Operators of Nigeria (ABCON), has called on the Federal Government and the Central Bank of Nigeria implement humane policies that can minimise the effects of inflation on the citizens.
ABCON in its economic review for the second quarter of the year, Q2’22, noted that sharp rise in commodity prices , a fall-out of COVID-19 pandemic and the ongoing Russian/Ukraine has worsen global economy.
“Nigeria needs to balance fiscal sustainability with the need to mitigate the effects of these overlapping crises on the poorest citizens. The excruciating pressure on commodities especially oil and gas globally is not exonerating the poor in Nigeria.
“Galloping energy prices as currently being witnessed in Nigeria, with lower real incomes, increased production costs, tightened financial conditions and constrained macroeconomic policy.
“Under these prevailing circumstances, the Government must avoid all discretionary policies such as multiple taxes, subsidies, and all fiscal tightening, which could worsen the recent increase in commodity prices,” the ABCON review observed.
On the free-falling naira it stated: ” The trend of depreciation of the exchange rate of the local currency is definitely a serious cause for concern to all stakeholders in the economy. Large swings in the exchange rate, and especially large depreciation, can destabilise prices and can do so in non-linear and even discontinuous ways as it is currently doing in the Nigerian economy.
“Monetary stability, usually accompanied by at least moderate exchange rate stability in the medium term, is the cornerstone of orderly economic activity.
“The current trend of increased depreciation of the value of currency against increased debt servicing burden increases borrowers’ credit risk, works against more capital inflows and tightening financial conditions.
“Analysts have established through heterogeneous panel co-integration methods that domestic currency depreciation leads to an increase in the external debt to GDP ratio over the long-term and it might, therefore, reduce the sustainability of external debt,”
Free-Falling