Recession: What FG didn’t do right – Soludo

Recession: What FG didn’t do right – Soludo

Former Governor of Central Bank of Nigeria (CBN), Prof. Chukwuma Soludo has said poor policy adjustments by successive governments caused the current recession in the country.

Soludo, who delivered the lead paper at the 2017 International Conference of the Department of Business Administration, Nnamdi Azikiwe University, Awka, said government does not need rocket science to fix the economy.

Raising hope for Nigerians, the former CBN boss said the what should be important now was for the country to get its regime policy right to ensure that recovery after recession was not sluggish and slow.

Speaking on the conference theme: “Managing a recessed economy: Options for Nigeria,”

Soludo said: “Bad, delayed and incomplete policy adjustment aggravated the impact of oil shock to drive the economy into recession, but there are bright spots.

“The problem with Nigeria’s successive policy makers is once oil goes up, we take it that it will remain so, and we continue to spend. But once there is a shock and oil goes down, we just think it is temporary and we start borrowing.

“They brought in the Single Treasury Account (TSA) and channeled funds into one account that did not allow spending, and they also fixed the price of foreign exchange. These are things you do not do.” He faulted the Federal Government’s current economic recovery and growth plan which he said lacks coherence and robustness.”

Soludo said the improving liquidity and relative stability in the foreign exchange market  will anchor or moderate inflation expectations. He said the federal government budget that has just been passed would need some critical legislations to accelerate the upside outlook.

“There is a political pressure obviously on government to perform; election is two years time, there is pressure that we have to perform, so government is reacting, they want to do something. These are outlooks, what I call bright spots and let me say this, with the oil price getting up, output getting better, budget getting down there, with relative stability in the market, Nigeria will get out of recession as day follows night.

“Recession is a cyclical thing, a permanent feature of every market economy. But whether you go five years before you have it or you go 10 years before you have it, the severity of it, how long it takes you before you come out of it depends on the policy regime in place.”

The former CBN Governor insisted that getting out of recession is easy. He said even if, under the current circumstances, the government does nothing “we will be out of recession, just for the fact of oil sector recovering. You must realise what it means to be out of recession, if you have taken 100 steps backward, and you take just five forward, you are out of recession, it is a technical thing.”

He warned that policy makers must change the current policy regime to ensure it grows foreign reserve as it gets out of recession, adding that the nation’s condition would be worse if the policy did not change.

He said, “If the current policy regime continues, this is my prediction, we will be out of recession, but the recovery will be a very sluggish one, very slow, very deadly…”