The Federal Government needs to coordinate its fiscal and monetary policies more closely, the President, African Development Bank, Mr. Akinwumi Adesina, has said.
Adesina, who spoke during a panel discussion at the Financial Times Africa Summit in London on Monday, said the move was necessary to improve the economic fortunes of the country.
“I think the naira is devalued, but…monetary policy and fiscal policy need synchronisation; that is very important,” Adesina said.
“There is a lot of pressure on the naira,” he added.
The Minister of Finance, Mrs. Kemi Adeosun, brought the need for coordination between fiscal and monetary policies to the front burner about two weeks ago when the Central Bank of Nigeria rejected calls for rate cuts.
Adeosun had urged the CBN’s Monetary Policy Committee to reduce the lending rate in order to reduce the Federal Government’s domestic borrowing costs.
Ahead of the MPC meeting, economic and financial experts had predicted that the committee would reduce the benchmark interest rate to complement the N350bn stimulus introduced into the economy by the fiscal authority the previous week.
Experts said unless the nation’s fiscal and monetary policies aligned, the process of bringing the economy out of recession might not be enhanced.
Highlighting this, the Executive Director, FCMB Capital Markets Limited, Mr. Tolu Osinibi, said, “So far, there seems to be a silo approach to the way government is doing things.
“There isn’t joint thinking, so the question you are asking is where the alignment is? There are various issues that the government has to grapple with, but various ministries seem to be working in isolation. It so far hasn’t appeared that there is tight coordination between the CBN and the ministry of finance.”
He added, “The coordination should be taking place at the level of the economic management team, which is headed by the Vice-President. I haven’t heard much about the policy positions and how they all link together.”