Monday, 04 March 2024 04:39

MPC’s rates hike: Double adult dose of malaria drugs on child with fever - Segun Sanni

Rate this item
(0 votes)

The Buhari government did great damage to Nigeria’s economy for the excessive money it created and threw carelessly into the economy. We’re facing the extremely negative impact of that excessive monetary expansion through its devastating contribution to galloping inflation and pernicious pressure on our exchange rate. Unfortunately, we can’t point to much positive that the money the Buhari government borrowed and created was spent upon.

The Tinubu government has taken the very wrong step by attempting to take out the excess liquidity by an unprecedented overreliance on monetary policies. Raising CRR from 32.5% to 45% and interest rates by 4% (to 22.75%) at once will produce a crowding out effect of chasing the productive sectors of the economy out of the loans market while the coast would be made clear for the government to keep borrowing massively through the high interest rates it has announced. This amounts to less money to the productive sectors of the economy and more money to the government which created the liquidity crisis in the first place. And government officials would still be taking the money to the FX market to buy more dollars and pile even more pressure on the exchange rate. There is absolutely no deterrent to their continuation of this destructive behavior. It’s a free for all.

The government will therefore not likely achieve the desired objective, yet would have been killing the economy by pushing it towards recession or low growth. That is what Emeka was saying, and which some of us have been saying. They’re driving up interest rates to unprecedented/crazy levels (22.75%) and crowding out the productive sectors from access to credit. Only the government will be borrowing while the productive sectors will be comatose. They desperately want to tame inflation but don’t mind pulling down the economy in the process. It’s like desperately trying to bring down a child’s fever and giving him double the adult dosage of malaria drugs. You may so bring down the fever but kill the child in the process. The interest rate hikes will kill the economy at the rate they’re going.

The fiscal/executive measures that are needed to control the excess liquidity and attendant inflation and speculative FX demand (proving deadly to the economy), Tinubu lacks the political will to tackle. We saw how single individuals (women) took huge billions in just one ministry, and the baby-cockroach concept tells me that is just a symptom to a much larger malaise. If the government probes the spending of the huge debts and money created by the last government, and probes NNPC on our massively stolen oil and Subsidy frauds, it would discover and confiscate huge sums (at least $10bn to $15bn) which will curtail the excess liquidity and bring much needed ‘revenue’ and FX to the government without doing damage to the productive sectors of the economy.

We all saw an Accountant General (Ahmed Idris) allegedly stealing N109bn, NSIPA woman (Halima Shehu) accused of stealing N44bn, Humanitarian Minister (Sadiya Umar-Farouq) N37bn, Betta Edu paid out N585m and gave N438m contract to Olubunmi Tunji-Ojo, the Interior Minister, etc, etc. These are the monies we should be going after and recovering and bringing back to the treasury and spending more judiciously in fueling the economy. But does Tinubu have the political will to do the above? Why is NNPC not being probed? Why is Mele Kyari still running NNPC despite all that happened there? Only the President can answer these questions.

July 26, 2024

CBN still hasn’t settled all FX backlog contrary to claims, local businesses insist

Nigerian corporates and SMEs have decried the non-settlement of Foreign Exchange (FX) forwards by the…
July 24, 2024

Amnesty International to FG: Nigerians have a right to protest

Amnesty International has urged President Bola Tinubu's administration to avoid threatening Nigerians who plan to…
July 20, 2024

Husband uses drone to catch wife cheating on him with her boss

A Chinese man reportedly caught his wife cheating with her boss during work hours by…
July 25, 2024

Meta deletes 63,000 Instagram, 7,200 Facebook accounts in Nigeria over scams

Meta Platforms said on Wednesday it had removed about 63,000 accounts in Nigeria that attempted…
July 26, 2024

What to know after Day 883 of Russia-Ukraine war

RUSSIAN PERSPECTIVE Kremlin names barriers to Ukraine peace talks Russia is open to peace talks…
June 19, 2024

Chips maker Nvidia rises to world’s most valuable company

Nvidia has become the world’s most valuable company following a staggering rally in its shares,…
June 18, 2024

Amusan secures fourth straight national title in 100m hurdles

Tobi Amusan has claimed her fourth consecutive national title in the women’s 100 metres hurdles…

NEWSSCROLL TEAM: 'Sina Kawonise: Publisher/Editor-in-Chief; Prof Wale Are Olaitan: Editorial Consultant; Femi Kawonise: Head, Production & Administration; Afolabi Ajibola: IT Manager;
Contact Us: [email protected] Tel/WhatsApp: +234 811 395 4049

Copyright © 2015 - 2024 NewsScroll. All rights reserved.