By Goddy Egene
An economist and Managing Director of Financial Derivatives Company Limited, Mr. Bismarck Rewane has declared that for the federal government to overcome the economic recession, it must borrow and sell assets to raise funds that would be injected into the economy.
The Nigerian economy is in recession and the government is looking for solutions to rescue the economy out of the doldrums. Speaking on the current state of the nation’s economy on Channels Television in Lagos on Friday, Rewane said first and foremost the government must inject money into the system.
According to him, since there is a fall in oil revenue, the government has to increase the deficit plan for 2016.
“The government must inject funds into the system and the executive is fully engaged because they know they cannot hide, they have to deal with the problem. And given the fall in oil revenue, you have to increase the deficit plan for the recovery. You must borrow and President Muhammadu Buhari has said the country will borrow at least $5 billion externally. We must sell some assets because when you are in this kind of situation, you have to sell some assets,” Rewane said.
The FDC boss added that the government should also look at the minimum wage of the citizenry and social intervention programme, saying that when there is recession it means the people’s earnings are falling.
The advice of Rewane for more borrowing came at a time when the federal executive council (FEC)has approved a three-year rolling external borrowing plan.
The Minister for Finance, Mrs. Kemi Adeosun said the approval would be transmitted to the National Assembly.
According to her, the loans would come from agencies such as the World Bank, African Development Bank, China Exim Bank, and other development agencies like the Japanese International Cooperation Agency (JICA).
She said the plan to borrow externally was in line with government’s strategy to focus on concessional debts, low cost loans particularly from multi-lateral agencies, noting that the loans would be applied to develop strategic sectors which government believed would help revive the economy.
She said the power sector would receive a significant amount of the loan to take care of projects militating against efficient power generation.
“The largest beneficiary of our borrowing is agriculture because it is equally strategic and we have programmes by the minister some of which he inherited and is going to restructure and reform and some are new to the ministry. ”
Adeosun emphasised that the economy must be diversified, saying “there are too many of us to keep on relying on oil. We can all see what happened at the output data of the oil and gas sector. What’s happening in the Niger Delta has dragged down the GDP of the entire economy. We’re too dependent on oil. We have to invest in capital projects.”