As the naira depreciation worsens, Professor of Political Economy, Pat Utomi, has said that the panic approach of borrowing to tackle the country’s currency crisis may hurt the economy in the long run.
The political economist took the position during a monitored interview on Thursday.
Faced with a crisis triggered by policy tweaks including the removal of fuel subsidies and the floating of the naira, the federal government is looking for an immediate remedy for the hardship that hit its over 200 million population.
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Among the options available to the cash-strapped government are external borrowings and $3.3bn crude oil swap deal between the Nigerian National Petroleum Company Ltd and the African Export-Import Bank to defend the ailing naira.
Utomi said, “How we got here was very clear. I said it years ago that we will get here. We are where we are and my first suggestion is that we stay away from panicking because what happens in this kind of circumstance is that in panic, you will throw all kinds of policies that won’t work and then you will go into a downward spiral.
“They must calm down, and look at the fundamentals of why we have these problems. Don’t get rushed into a push from outside by people who don’t even feel the pressure but don’t get cornered by people who just react. Just calmly think about your national strategy and systematically implement it.”
The professor said going to “borrow $3.3bn today to shore up the naira is meaningless because within two weeks, it will diminish.”
He admitted that the naira is losing its value to over N1900 per dollar as of Thursday, February 22, 2024, because the country has been unable to produce and has relied on imports.
On the food crisis, Utomi said “The reason why food prices are the way they are is that we are not producing food. The farms have been abandoned by farmers who feel insecure. On how to deal with that, there is short-term and long-term.”
According to him, the ‘immediate’ short-term measure to tackle the food crisis is for the government to open food and grain reserves to improve the food supply.
“We must mobilise every kind of security force available. I am glad they have come to state policing finally, I think we should further down strengthen local militia and assure farmers that they are safe.
“Move all these militias even soldiers into the farm and say to them the legumes, the things that will be harvested in three months should be produced. We need to deal with this like ‘Operation Feed the Nation’. Let the country know we are in an equivalent of a war” he said.
Prof. Utomi said if the immediate short-term measures are followed, the country will be able to moderate high food prices.