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Tella advises CBN to pursue quantitative easing approach on forex in 2017

Leading Economist, Prof. Sheriffadeen Tella, has said that the Central Bank of Nigeria (CBN) must pursue monetary or quantitative easing approach in 2017 to revitalise the nation’s economy and solve the country’s lingering foreign exchange crisis.

The Professor of Economics, Department of Economics, Olabisi Onabanjo University, Ago-Iwoye, Ogun State, made the assertion in an interview in Lagos, saying the CBN must adopt monetary or quantitative easing whereby it buys financial assets from the private sector to stimulate the economy through private sector spending.

In his submission, he said the adoption of quantitative easing would return inflation to its target level, adding that this is time for the apex bank to bring down monetary policy rates and lending rates to bring the economy back on track.

He said currently, there is need for temporary restrictive policy on some imports until domestic production improves towards the end of the second quarter of the year if the 2017 budget implementation commenced in time.

According to him, early passage and commencement of the capital aspects of the 2017 budget will raise the moral of Nigerians and spur the creation of jobs and growth in Small and medium Enterprises (SMEs) which drive economy better.

He argued further that “There is still a large amount of Naira in the economy to fund speculative activities and those who have such money can buy foreign currency at any rate since it does not cost them anything”, stressing that “If the EFCC checks transactions on the accounts of those big politicians, it will see that the accounts have not been quite active but they are spending money for daily transactions”.

“So, where are they getting the money they are spending on daily needs, acquiring property, refurbishing existing property or paying their workers?

“On the exchange rate, I predicted before that the Naira will reach N500 to a dollar by the end of this year and we are there now,’’ Tella said.

Tella attributed the development at the foreign exchange market to speculative attack on the nation’s currency, noting that colour swapping of the Naira was still an option to reduce speculative attack on the currency.

“The reasons are based on activities of speculators, largely those who have stockpiled Naira at home and converting same to foreign currency and for which I advocated change in or swapping of colour of N500 and N1,000 notes.