President, Road Transport Employers Association of Nigeria, RTEAN, Alhaji Shehu I. Musa has urged the federal government to direct more spending to domestic production of goods and services to increase supply side and encourage domestic investment aimed at checking inflection in the economy.
Musa, who stated this during a chat with journalists in Abuja, noted that bank borrowing should be directed to production of goods and services, which would encourage investors to invest in the country.
He said the current high inflation rate originates from low government spending, reduction in money in circulation which has chased lesser outputs in the economy in the face of poor purchasing power
The president said that there were various approaches to checking high inflation rates ranging from taking appropriate fiscal, monetary, trade/exchange rate and industrial policies.
Musa said that the peculiarities of the present inflation in the economy demanded some urgent specific intervention measures.
According to him, “What we have seen now with prices, coupled with slowed government spending this year is evident that Nigeria relies majorly on imported goods and services.
“The resultant inflation we witness emanates from the deficit in forex and the fall in domestic production of goods and services which has again contracted consumption and increase prices.
“The National Bureau of Statistics, NBS, records a growth rate of negative 0.36 per cent for the first quarter of this year down from 2.11 per cent recorded in the fourth quarter of 2015.
“For price stability to be guaranteed, first and foremost, the new forex is hoped to check the scarcity in foreign exchange,’’ the expert said.
In addition, she said that the forex would boost ability to invest and purchase foreign currencies using market forces to regulating the high demand compared to supply.
“The CBN having seen the current inflation, has no much choice than to let market forces determine the exchange rate given the over reliance on imports and fall in government revenue from oil”
He commended the Federal Government for unveiling the new forex policy, which would be determined by the market forces, noting it was the right direction considering the huge foreign exchange deficit we witness in the economy which has hampered price stability.
Musa said that the government thought it wise to restrict access to forex in order for people to concentrate on local production and patronage.

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