- LCCI Faults IMF’s Call for Monetary Tightening
The Lagos Chamber of Commerce and Industry has described the recent call by the International Monetary Fund for a further tightening of Nigeria’s monetary conditions as inappropriate.
The chamber’s reaction was contained in a statement signed by the Director-General, LCCI, Mr. Muda Yusuf, on Monday.
He said, “In the light of the operating conditions of the investors in the Nigerian economy, especially the high interest rate in the economy, calling for a further tightening of monetary conditions is inappropriate.
“High interest rate is one of the major impediments to competitiveness of firms in the economy. In an economy where interest rate is already between 25 and 35 per cent, calling for a further tightening of monetary policy should not be contemplated at this time. Indeed, the high non-performing loans in the banking system is partly as a consequence of the exorbitant interest rate in the economy.”
Yusuf equally opposed the call for the imposition of excise duty by the IMF, noting that the practice would do more harm than good to manufacturing firms in the country.
He described the manufacturing sector as one of the most vulnerable, already grappling with high operating cost, high energy cost, weak purchasing power of consumers, an unfriendly tax environment, influx of smuggled products and high cost of logistics.
The LCCI DG maintained that imposing additional excise duty on the sector would conflict with the vision of the Economic Recovery and Growth Plan of the Federal Government regarding economic diversification, job creation and local value addition.
“If the government cannot give tax incentives to manufacturing firms, it should not impose additional tax burden on them, given the challenging operating environment for production in the economy,” he added.
On the development finance role of the Central Bank of Nigeria, Yusuf said, “We do not agree with the IMF proposal that the CBN should not get involved in direct financing of the economy.
“The intervention funds in the economy have been beneficial to many real sector investors. What needs to be done is to improve its penetration, transparency of allocation and sectoral coverage.”