The Centre for the Promotion of Private Enterprise (CPPE) has called on President Bola Tinubu’s administration to promptly deploy measures to mitigate the current headwinds inflicted by recent reforms.
According to Muda Yusuf, director, CPPE, interventions needed should be a mix of direct interventions, tax incentives for low-income employees and small businesses.
He also advocated the reduction in import duty on some critical intermediate products for key sectors of the economy including transportation, health, power and energy sectors.
“The improved fiscal space created by the reforms should make these mitigating measures feasible and they have to be implemented urgently in order to give the current reforms a human face.
“It is laudable that the Tinubu administration is charting a new and positive course for the economy which portends bright prospects for recovery and growth.
“Already there are clear indications of elevated investors confidence, improvement in the government fiscal space, higher prospects of exchange rate stability in the near term, and positive expectations of better economic governance. The short to medium term outlook for forex liquidity is very good and prospects of increased inflow of capital is very bright.
“However, there is an urgent need to address the social outcomes of the recent reforms, especially the inflationary pressure induced by the fuel subsidy removal.
Urgent measures need to be put in place to mitigate the soaring cost of living and the escalating operating and production costs, especially for of businesses,” he said.
He noted that inflationary pressures may intensify in the near term, adding that exchange rate may come under pressure in the short term as forex demand backlog exerts pressure on the official foreign exchange window.
For him, with a better fiscal space, the outlook for lower fiscal deficit, moderation in the growth of public debt, reduction in debt service burden, and an improvement in the macroeconomic stability are very positive.
“But the pressure is expected to ease before the end of the year. This would pave way for an equilibrium exchange rate which would be more tolerable and sustainable.
“Meanwhile the central bank of Nigeria should put in place a sustainable intervention framework to moderate the volatility in the forex market.
“All of these would impact on economic growth prospects in the second half of the year,” he added.