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FG abandons CBN, unveils 10-point agenda to wake economy, confidence

There are credible grounds to believe that the federal government may not have been very happy on why the Central Bank of Nigeria (CBN) cannot come up with better workable economic revival models since it announced that it remained all rates unchanged after the end of her MPC meeting last months.

Though coming as fiscal policies which are far from the monetary policies expected from the CBN, the government weekend outlined a 10-point fiscal roadmap to reset the economy to a path of growth.

The Minister of Finance, Mrs Kemi Adeosun revealed the outline when she represented Vice President Yemi Osinbajo, at the annual dinner of the Lagos Business School.

Adeosun noted that “the Federal Government’s Fiscal Roadmap is addressing barriers to growth that will drive productivity, generate jobs and broaden wealth creating opportunities to achieve inclusive growth.”

The fiscal roadmap expected to come into force from January next year include Fiscal Policy Initiative that will impact on the economy.

Expected Impact

  1. Recognise inherited debt profile after a robust audit process:
  • Introduce promissory note programme to finance verified liabilities
  • Issue debt certificates to contractors, Ministries, Departments & Agencies (MDAs), and State Governments
  • Improve cash flow of businesses
  • Improve Banks’ Non-Performing Loans (NPLs)
  • Free up Banks’ balance sheet for lending to private sector
  • Improve government’s business interaction with the private sector
  1. Mobilise private capital to complement Government spending on infrastructure:
  • Roads Trust Fund
  • Family Homes Fund
  • Extend infrastructure tax relief to a collective model to attract clusters of corporate entities
  • Expand the provision of infrastructure
  • Drive growth of non-oil sector.
  • Drive economic growth
  1. Strengthen fiscal/monetary handshake:
  • Replace administrative measures on list of 41-items with fiscal measures to reduce demand pressure in parallel market
  • Encourage domestic food production through specific incentives e.g. accelerated depreciation on food manufacturing equipment and Zero (0%) duty on green houses
  • Planned revitalisation of refineries
  • Increase Diaspora remittances via participation in the buyer support scheme for the Family Homes Fund
  • Reduce demand for US Dollars
  • Increase supply of US Dollars
  1. Incentivise exports:
  • Restructure the Export Expansion Grant (EEG) to a tax credit system
  • Rationalise tariffs and waivers in key export sectors
  • Encourage/incentivise non-oil exports
  • Drive import substitution
  1. Encourage investment in specific sectors through fiscal incentives:
  • Accelerated depreciation on equipment in strategic sectors e.g. food processing, mining and power
  • Rationalise tariffs and waivers in priority sectors
  • Drive investment in strategic sectors
  1. Continue expansion of fiscal space through revenue enhancement and cost consolidation:
  • Customs Single Window (being implemented through a Private Public Partnership (PPP) scheme)
  • Template for non-allowable expenses for government agencies.
  • Overhead cost control by the Efficiency Unit
  • Continuous risk based audit by the Presidential Initiative on Continuous Audit
  • Revenue enhancement
  • Cost containment
  1. Improve fiscal discipline at Sub-National level:
  • Extension of efficiency unit at Sub-National level
  • Fast track municipal bond issues to deepen the bond market
  • Conversion to International Public Sector Accounting Standards by all State Governments.
  • Improved fiscal position at Sub-National level
  1. Enable and accelerate Recoveries process:
  • Whistle-blower scheme
  • Centralised database on recovered assets
  • Asset tracing
  • Professional management of recovered assets
  • Increased efficiency of Recoveries process
  • Increased budgetary funding availability from Recoveries
  1. Rebalance debt portfolio to extend maturity and optimise debt service cost:
  • Rebalance public debt portfolio with increased external borrowing (60:40 target)
  • Extend maturity profile of public debt portfolio
  • Deploy long-term debt instruments including Infrastructure and Retail Bonds
  • Maximise use of concessionary loans
  • Rebalanced debt profile with improved debt service to revenue ratio
  1. Catalyse Micro, Small and Medium Enterprise (MSME) growth through specific measures to improve capacity and access to finance:
  • Development Bank of Nigeria (US$1.3bn)
  • Increase share of business awarded to MSMEs from Government contracts
  • Tax harmonisation and tax incentives
  • Accelerated depreciation