The continuous push for wage increase by employees in the country is harming the Nigerian economy, the Federal Government has said.
It said running the country with a large fiscal deficit was not only detrimental but would impact negatively on the overall economy.
The Director-General, Budget Office of the Federation, Dr. Bright Okogu, explained that Nigeria’s economy should be protected and positioned in way that would attract investors.
Okogu spoke at one of the technical sessions during the Oil and Gas Finance Seminar hosted by Diamond Bank Plc in Abuja on Monday.
He said, “The challenge of many oil dependent economies such as ours is basically that you are faced with the reality of the changing global economy and you cannot afford to ignore it. What I mean by not ignoring it is that you will take action to protect your economy to position yourself.
“And there are two major ways to do this. One of them is by ensuring good macro fiscal management. You cannot go and be running large fiscal deficits because that will mean that you will need to borrow the limited amount of money available in the market to meet your deficit obligations.
“There a number of things that cause this; one of them, and I just need to say it, is the issue of continuous push for wage increase. The other one is the leakages in the system such as issues related to subsidy and so on. If you are spending so much, what you are doing is that the macro fiscal base of the economy will be affected and you cannot just afford to ignore it.”
The DG also noted that the emergence of shale oil and gas in the United States was a threat to Nigeria’s crude oil and explained that the commodity had the tendency of displacing the conventional crude.
He said, “How do you therefore as a nation begin to mitigate some of these impacts? We need to do as much as possible to make sure that the domestic macro system is in a good shape. Again we need to be able to fill buffers like the Excess Crude Account and indeed also the external reserves.”
Okogu stated that the delay in the passage of the Petroleum Industry Bill was inhibiting private sector participation in the Nigerian oil and gas sector.
He said, “We want to become more competitive as an investment destination so that potential investors can look at Nigeria because other people are equally fighting for the same crude funds available globally.
“We really believe that the National Assembly should move more quickly to pass the PIB and it will at least remove the element of uncertainty as told by many practitioners in the sector. They may have identified things that they want to do but they are waiting to see what will happen.”