Some economic experts, on Thursday, expressed the need for the Federal Government to immediately and purposefully develop the non-oil sector to mitigate the effect of the slump in oil prices in the international market.
The experts gave advice while speaking with the News Agency of Nigeria (NAN) in Ibadan on the implications of falling oil prices.
A Policy Economist, Dr Olumuyiwa Alaba, told NAN that the government must, as a matter of urgency, build the sectors that would sustain the value of the Naira in the face of an oil price crash.
He said that the implications of the slump in oil price was that the nation was likely to run a budget deficit close to about N5 trillion if the current budget was not reviewed.
“We might not be able to do any capital project, because we were only struggling to do capital projects even when things were going well for us.
“It means we are going to borrow massively to sustain the budget. This, by implication, means that our debt profile will increase.
“Government will have to borrow more, both domestically and internationally, as it must meet its obligations in terms of being able to pay salaries and so on.
“If the rest of the world trusts us, we can increase our foreign debt profile, as borrowing internally will crowd out the private sector, thus pushing it out of the market,” he said.
According to him, proactive measures were needed to sustain the economy, in terms of strengthening the macroeconomic fundamentals.
He expressed the fears that inflation, as well as interest rates, might rise if proper actions were not taken.
Alaba said the country might not escape devaluation of the naira, if oil prices keep falling.
He opined that the border closure had not really helped legal trade to thrive but the illegal ones, as the Nigeria Customs Service kept seizing illegally-imported goods at various stores in the country.
The policy economist, however, enjoined the Central Bank of Nigeria (CBN) to focus on its core functions, which, he said, were monetary policy, reserve management, and foreign exchange management.
Another financial expert, Mr Tunji Adepeju, said that the government was taking the right measures by reviewing the 2020 budget to meet the present realities.
“The good thing is that we are already looking at other sources of revenue, that is, the non-oil sector.
“The reserve from the non-oil sector has risen, particularly taxes, while solid minerals and tourism too are moving up.
“Government should review everything and come to terms with what is going on.
“The implication of this is not being able to finance the budget and depletion of our foreign reserves,” he said.
Concerning the proposed N22 billion loan, Adepeju said the Federal Government had no other option than to borrow, especially for infrastructural development.
“Owing to the fact that the revenue source to support or finance such development is not available, borrowing is the only option left,” he said.
Adepeju, however, said that if the country must borrow, it must be for specific purposes.
“All that is left is for Nigerians to monitor and ensure that such monies are used for the purpose for which they are meant,” he said.
The experts, however, said that they expected growth in the economy to translate into good living conditions for Nigerians, with the hope that if managed well, the nation’s economy would not slide into recession for the second time.
NAN reports that oil price slumped to $30 per barrel on Monday, but picked up to $37 per barrel on Tuesday.
Some experts have hinged this development on the effects of the trade and technology wars between Saudi Arabia and Russia, and more importantly, the spread of Coronavirus across the world. (NAN)
