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Economy | Fiscal Policy

Stimulant is Necessary but not Sufficient - FDC

Apr 15, 2020   •   by   •   Source: Proshare   •   eye-icon 1537 views

Wednesday,April 15, 2020 / 06:02 PM / by FDC Ltd / Header Image Credit: Channels TV

 

The average size of the stimulus package as apercentage of GDP in advanced economies is 12%, e.g. in the US it is 11%. InSSA the average stimulus is 0.4% of GDP. The stimulus package is usuallydimensioned against the depth of the anticipated recession.


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Nigeria is now expected to grow at -3.45% in 2020, acontraction of 5.72% from 2019. Therefore, the FGN stimulus of 0.34% of GDP isunlikely to move the needle significantly. Whilst stimulants are necessary tojumpstart fragile economies like Nigeria, structural policy changes are requiredto achieve macro-economic stability and long term sustainable growth.

 

These include the adoption of a market determined andefficient pricing model for exchange rates, refined petroleum products,fertilizers etc. The Nigerian authorities have commenced this process byadjusting the exchange rate by 15% and adopting a new approach to the prices ofpetrol. But the question remains - is this enough?


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In the link below, these and other questions wereanswered by Bismarck Rewane on Channels TV News on Easter Monday.

 

Watch Video

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