FG urged to review monetary, fiscal policy to tackle inflation

Otunba Kunle Folarin

Otunba Kunle Folarin

 

Chairman, Port Consultative Council (PCC), Otunba Kunle Folarin, has urged the Federal Government to review some of its fiscal and monetary policies to reduce inflation and alleviate the sufferings of Nigerians.

Otiunba Folarin, who gave the advice while speaking in a chat with SHIPS & PORTS, said a review of the Central Bank of Nigeria (CBN) monetary policy, which he noted drives inflation, would help reduce the high cost of goods and services in the country.

“We have to look at the fiscal and monetary policies of the government. That is what drives inflation. The fiscal policies which include taxes which are imposed on people and they have continued to increase, stamp duty with the existing tax regime on VAT and also with the monetary policies of the government from the Central Bank, there is an increase in interest rate which are charged, these are factors responsible for the inflation we are experiencing today.

“Central Bank monetary policy is key and government fiscal policy is also key. If those two principles are not addressed, we would just be moving in circles and coming back to the same location,” he said.

Folarin also advised the government to give sectoral allocation to support the real sector of the economy to generate employment while also identifying high rise areas of inflation that impact on the standard of living of the people.

“We need to identify the key areas of the inflation composite that impact on the lives of the majority of Nigerians. For example, inflation in areas such as food, transport and healthcare that impact the people and make them suffer should be looked into. Inflation in those areas individually is more than the average of 14 percent. Those are the areas they should look at and the way to deal with it is to apply a very benevolent fiscal and monetary policy.

“If you are giving the real sector of the economy like agriculture and manufacturing the real support they need, it will generate employment. If the monetary policies give preference to agriculture and the people who are in agriculture can access soft loans and get seeds as well as machinery to support their operations, definitely, the cost of production will reduce and unit price of goods and services will also reduce and of course, it will be transferred to the ordinary people.

“If employment is generated, people will have the ability to be able to endure or afford the increases in prices. Inflation is inherent in development and that is a fundamental economic principle. When money supply outgrows demands, evidently, there will be inflation.

“Also on transport, we can start by looking at the Customs duty payable on imported vehicles for mass transit and not concentrate on revenue generation which is the mantra of Customs. They should also look at other things that can provide mass transit. The railways must be encouraged and developed to play a very big part in mass transit because a single railway movement could take up to 1,000 people at a go and they have a right of way,” Folarin added.