Reforms Painful, But desirable—FG
Nigeria’s Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, has accepted that current economic reforms are painful but desirable as they have been responsible for limiting further crisis.
Oyedele stated this Wednesday in Abuja while briefing the press on the current administration’s reform scorecard.
According to him, the reforms included but not limited to the removal of petrol subsidy and the unification and liberalisation of the foreign exchange market, which resulted to higher prices and increased borrowing costs.
“Those decisions came at a real cost, and we are not here to pretend otherwise,” Oyedele said.
“Prices rose. The naira adjusted sharply. Households and businesses felt it, and many still do.”
Speaking on the scorecard, Oyedele said:
“What we want to do today is put the whole picture in front of you, the Nigerian people — what those reforms cost, what they have achieved and, just as importantly, what they prevented,”
He noted that the scorecard contains 25 indicators across five areas, including fiscal sustainability, external stability, investment climate, social impact, growth and productivity.
Oyedele said the development was necessary because simply comparing prices before and after the reforms does not provide the complete picture.
“It is harder to see what did not happen,” he said, arguing that the government’s assessment attempts to quantify the economic damage that could have occurred had the reforms been delayed.
Oyedele said the previous foreign exchange regime had become unsustainable and had created opportunities for arbitrage and corruption.
“We are talking about an exchange rate system that had become a source of arbitrage, destruction and corruption, rather than stability,” he said.
Oyedele also defended the government’s decision to end the subsidy regime, arguing that the benefits of the policy had been captured by rent-seekers rather than ordinary Nigerians.
He said savings from the reforms had increased resources available to the federation, while the Federal Government had also generated additional revenue from government-owned entities.
The minister said the additional resources had been used to finance higher wages, debt service, infrastructure and other government expenditure.
He highlighted wage adjustments and the increase in the national minimum wage as evidence that some of the additional fiscal resources were being channelled to workers.
He acknowledged that the reforms had significantly increased the cost of servicing foreign-currency debt because of the naira’s depreciation.
“If we’re paying $1m before in interest on our foreign debts, it is still the same $1m, but instead of N460, it’s now N1,415,” he said.
“You don’t negotiate, you don’t delay. You pay because delay or default have consequences.”
The minister also pointed to what he described as improvements in the ability of state governments to meet salary and pension obligations.
He said 27 states had struggled to pay salaries and pensions before the reforms, whereas the government’s assessment now puts the number at zero.
He gave an example of the increase in the minimum wage from N30,000 to N70,000, student loans, cash transfers, subsidised mortgages and agricultural support among measures intended to cushion the impact of the reforms.
He however stressed that the government’s scorecard was not intended to portray the reforms as an unqualified success.
He further said “We are being honest about the cost. We are not saying all of it is rosy,”.
