The Director-General of the Securities and Exchange Commission (SEC), Mounir Gwarzo, has said that the Federal Government’s 2017 budget is aimed at increasing the country’s productive sector spending.
Gwarzo told the News Agency of Nigeria (NAN) on Monday in Abuja that the budget aimed at resolving most of the economic challenges currently facing country.
“We believe that the government budget for 2017 is a very promising budget. Its clearly a budget that is aimed at solving some of our problems. And I think the path government has taken is in my opinion the right part.
“From an economic point of view, when a country is in recession there are basically two economic models that you use in solving that recession.
“You either use what we call the classical model, or some people call it the monetary model. The classical model emphasize on using the monetary policies, interest rates and exchange rate to address the recession.
“The other model is what economist call the Keynesian model or some people call the fiscal model where government will now use physical interventions in terms of spending to reflate the economy, and I think that is what this government is looking at using the physical aspect by increasing spending.
“By the time you increase spending the disposable income of people will go up, by the time it goes up there will be savings and when there is savings there will be investment. And investment will now create growth and I think that is the focus of this budget which to us is something that is in the right direction.”
According to Gwarzo, countries that had gone through depression and recession used the fiscal model to solve their economic issues successfully.
He added that the current administration is cutting down excess spending and ensuring those excesses are invested in the productive sector.
Gwarzo said the government was also revitalising the commodity exchange in line with its efforts to diversify and grow the agricultural sector.
According to the Director-General, agriculture is the main stay of any economy, adding that history has shown that no country has actually progressed by relying only on the oil sector.
“The best way that you can address your mineral or agricultural sector is if you have a very thriving exchange because that is the only avenue that the farmer will have price discovery.
“That is the way he can have value for goods, standardisation, and also have opportunity to preserve those goods, and we have never had that in the past.
“Government has taken steps now to revitalize the commodity exchange, the Nigerian Sovereign Investment Authority have agreed to invest in reactivating the commodity exchange.
“So I presume in the next six months that exchange should start working in good speed.
“Conceptually, and with the commitment and dedication of government officials, we believe that things will be much better if we continue with the current policy and dedication that is required.”
He said that the commission wa planning on looking at the 2017 budget towards keying into the various aspect concerning capital market.
Gwarzo said that everywhere in the world, the capital market played a very important role by contributing not less than 80 per cent of the country’s GDP.
“But in Nigeria, the capital market contributes probably about 20 per cent or less than that.
“So the seminar we are going to have in Lagos, we are going to invite academicians, we are going to invite economists, we are going to invite capital market practitioners to look at 2017 budget.
“They will look at the lessons, look at the implications in the capital market and proffer solutions on how government can leverage on the capital market.
“And also for the capital market community, let’s look at the budget, see where we can take advantage of, see areas that we can provide certain incentives and some of the benefits that can also be tried by the capital market,’’ Gwarzo said.
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