THERE is obviously not a one stop solution to all the economic challenges of nations of the world as peculiarities should determine the manner and scope of application. That is precisely why the proponents of application of innovative home grown national growth plans for economies have often criticized the Bretton Woods Institutions and their agents for their recommendation of stereotyped economic recovery and growth trajectory that have ended up creating deeper social crises and economic dislocation curves. Historically, the World Bank and the International Monetary Fund (IMF) were set up at a meeting of 43 countries in Bretton Woods, New Hampshire, USA in July 1944 to help rebuild the shattered postwar economy and to promote international economic cooperation.
Truth, however, is that nations apply their reform prescriptions hook line and sinker at their own peril. Since May, 2023, keen followers of the Bola Tinubu’s administration have observed that the Federal Government has adopted a ‘copy and paste’ attitude in adapting the recommendations of Brenton Woods institutions into what Tinubu ‘s economic team calls needed economic reforms. The rather painful reality is that the so called economic reforms are causing great pain and far reaching impoverishment in the land with people’s earning power getting deformed, many have been turned beggarly, even as investors are relocating in droves.
The IMF has been known to operate under the mantra of creating stable climate for international trade by harmonizing monetary policies, and maintaining exchange stability of member countries while the World Bank, on the other hand, serves to improve the capacity of countries to trade by lending money to war-ravaged, economically-depressed and impoverished countries for reconstruction and development projects.
Since May 2023, the Federal Government under President Tinubu has implemented reforms targeted at stabilizing the economy, improving fiscal health, and improving on foreign exchange reserves. These measures have ended up inflicting so much pain and deprivations on the people. The government on the other hand has maintained that the pains of today are necessary to pave way for the great gains of the future, that of course is for those who are alive to see that future materialize as many are caving in by the day. Emerging facts however confirm that the future being referred to is at best a mirage.
Inflation has remained high with cost of living becoming increasingly unbearable. Cost of governance has paradoxically remained one of the highest in the world while Monetary and foreign exchange (FX) pol i c i e s have remained increasingly opaque and distortive. When prescribed reform pills are insincerely and selectively administered, they stand the risk of turning deformative rather than reformative or curative. Today, more jobs are being lost to business shutdown and relocations. Food insecurity has been worsened by the pervasive insecurity which has made farmers unable to attend to the business of food cultivation.
The prescription Agency, the IMF last Friday stated, rather categorically that Tinubu’s reforms which Nigerians in undisguised frustration call T.Pain are failing to meet the targeted results.
In that latest outlook report for sub-Saharan Africa, IMF indicated that the broad-based economic reforms embarked upon by the President Bola Tinubu-led Federal Government are still struggling for a positive impact, 18 months after commencement with no tangible positive results.
Nigeria was also listed to have recorded the worse exchange rate instability and local currency depreciation so far this year.
The report further highlighted the impact of debt burden on fiscal stability listing Nigeria amongst the suffering countries.
It stated: Debt service capacity remains low by historical standards. In almost one-quarter of count r ies, interest payments exceed 20 percent of revenues, a threshold statistically associated with a high probability of fiscal stress. And rising debt service burdens are already having a significant impact on the resources available for development spending.
Allowing the Naira to float in value for an import dependent nation was a major policy miscalculation on the part of the Federal Government. Today the economy is in dire straits. The foundational policies of the administration which are the removal of petrol subsidies and floatation of the naira have brought untold hardship on the average citizens while the political elites still luxuriate in Olympian comfort of palatial splendour funded from the common wealth. That is a standard example of a vindictive and ill-targeted reform that will continue to fail in acheiving the desired result. The time indeed is rife for President Tinubu to own up that he was wrong on the foundational policies of his administration. That is the only path of honour left for him to take. Today, the huge burden of the colossal policy failure is being felt by the people and businesses. It has also been generating political tension that one does not require any power of clairvoyance to know that even at the risk of being charged with treason, many Nigerians are still warming up to protest the convulating and multi-dimensional pains of a misapplied economic reform policy.
