House of Reps & SLS Agree on Fiscal Restructuring Imperative
Tuesday, December 07, 2010, Abuja
* Goodluck Jonathan encourages debate for the good of the country
Here are the key points arising from the exchange between the CBN Governor and the honourable members of the House of Representatives, viz:
1.This hearing was more cordial and mutually respectful. Members of the House of Reps were very attentive and prepared.
2.The CBN Governor, Sanusi Lamido Sanusi reiterated the context in which his statement on FG overhead costs was made; a lecture delivered at the 8th convocation of the Igbenidion University, titled “Growth Prospects for the Nigerian Economy.”
3.One of the key impediments to sustainable growth, as highlighted in the presentation, remains the incidence of rising inflation. The FG recurrent expenditure presents the highest pressure on inflation.
4.As the custodian of the government agency responsible for price stability in the economy, the CBN Governor expressed his views about the need for fiscal retrenchment and fiscal consolidation, the need to reduce FG overheads, in favour of capital expenditures that will ensure real sustainable development.
5.The CBN Governor warned that borrowing long-term for current consumption, rather than Capital Expenditure, does not augur well for the economy. If the pattern of expenditure and consumption continues without the necessary revenue generation from capital, it could lead to crisis in the nearest future.
6.The subject of the actual definition of the overheads and the real figures used in the declaration by the CBN Governor. Kindly read a public accounting perspective as espoused by Eghes Eyieyien. http://www.proshareng.com/articles/2192
7.The CBN Governor, Sanusi Lamido Sanusi affirmed as he did during the senate hearings that he had no intention of maligning the NASS, recalling the support that the CBN has enjoyed from the NASS in implementing the banking reforms, the AMCON bill, etc.
8.The CBN Governor, Sanusi credited President Goodluck Jonathan for allowing his officers to express views on FG policy, even if those views may be sometimes appear uncomfortable, or in the minority amongst the cabinet at the time (emphasis ours). It however confirms a key element of good leadership to see that the President of the Republic permits/encourages debate for the good of the country.
9.The Joint Committee of NASS, on their part, stated that the House of Reps has in the last two years, consistently expressed the same concerns on the imperative to restructure the FG expenditure, therefore aligning with the CBN Governor’s position, notwithstanding the controversy on what the actual figures may be.
10.For a country in the quest for rapid and sustained development, capital expenditure should always be accorded higher priority in order to increase the stock of capital formation needed to grow the productive base of the economy.