Book sheds light on challenges facing next Nigerian government

Olumuyiwa S. Adedeji, in his publication, A Decisive Moment in Nigeria: Fiscal Strategy, Policy Coordination, and Macroeconomic Stability, analyzes the challenges the next administration will face in repositioning the country.< /p>

Despite the enthusiasm associated with political campaigns in Nigeria, the reality is that the next administration will face a nation facing significant fiscal and macroeconomic challenges.

This publication focuses on adopting a more integrated and comprehensive framework for the conduct of fiscal policy, with emphasis on improving domestic resource mobilization, improving the spending efficiency and exploring alternative sources of budget deficit financing consistent with macroeconomic stability and growth. The note also addresses the criticality of coordination between fiscal and monetary policy. The new administration has a major role to play in adopting a more comprehensive fiscal framework and ensuring more effective policy coordination, including by limiting or eliminating the quasi-fiscal activities of the monetary authority and other agencies and creating a council fiscal and monetary coordination.< /p>

International financial institutions should stand ready to assist the new administration in terms of additional financing, strategic technical assistance and a return to mainstreaming intergenerational equity into their fiscal policy advice in Nigeria.< /p>

The truth is that Nigeria's recovery from negative economic and health shocks has been relatively weak. The reporting period (2012-2022) was marked by the 2014 Ebola outbreak, the 2014-15 oil price shock and subsequent volatility, the 2020 pandemic and the Russian invasion of Ukraine in 2022.

These negative shocks had a significant impact on macroeconomic performance.

The Nigerian government is to be commended for its proactive actions, including a robust infection tracking system that helped contain the health and macroeconomic impacts of the Ebola outbreak and the 2020 coronavirus pandemic. Monetary and fiscal responses to the pandemic have pulled the economy out of recession. However, the initial macroeconomic and structural conditions prior to the onset of these shocks, combined with incomplete policy adjustment and inadequate economic coordination, have contributed somewhat to the current economic challenges.

Limited economic coordination at the federal government level has an impact on economic performance. The existence of various forms of quasi-fiscal activities makes it difficult to determine the level of aggregate demand at the policy design stage.

For example, the Central Bank of Nigeria (CBN) fulfills development functions through its various interventions and at the same time finances budgetary operations.

These sectoral interventions could eventually and potentially contribute to alleviating supply-side constraints.

Despite the usual excitement associated with political campaigns in Nigeria, the next administration will have to deal with a nation with deep-rooted macroeconomic problems.

The electoral campaign has started for the 2023 elections and some parties have published their economic plans. These plans need to be questioned intensively by all Nigerians, laying the groundwork for what needs to be done differently over the next four years to lift the country out of the current economic and social quagmire.

Nigerian policymakers face many challenges, but this thought-provoking article focuses primarily on fiscal issues.

Fiscal policy is important for macroeconomic stability, economic prosperity, and rebuilding the social contract.

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