JUST IN: Tinubu Government Addresses Economic Crisis Criticism from New York Times

 JUST IN: Tinubu Government Addresses Economic Crisis Criticism from New York Times

The Nigerian Presidency has addressed a recent New York Times article that criticized the country's economic trajectory, labeling it the worst in a generation.

Bayo Onanuga, Special Adviser to the President on Information and Strategy, responded on Sunday to the piece authored by Ruth Maclean and Ismail Auwal. The article, titled "Nigeria Confronts Its Worst Economic Crisis in a Generation" and published on June 11, was described by Onanuga as embodying the usual predetermined, reductionist, and derogatory manner in which foreign media often report on African nations.

Onanuga asserted that due to the "misleading" nature of the report, it was necessary to clarify the misconceptions it presented regarding the economic strategies of President Bola Tinubu's administration, which commenced at the end of May 2023.

He criticized the report for painting a grim picture of the inflationary impacts experienced by some Nigerians over the past year and unfairly attributing these issues solely to the new administration's policies. He argued that the report was biased, focusing only on negative aspects without acknowledging any positive economic measures being implemented by the central and state governments.

Onanuga emphasized that President Tinubu did not create the current economic challenges but inherited them. He quoted a respected economist who described the economy Tinubu inherited as "dead," necessitating urgent and significant interventions to prevent a crisis similar to those in Zimbabwe and Venezuela.

This context, according to Onanuga, led to the government's policy decisions in May and June 2023, which included the elimination of the fuel subsidy regime and the unification of multiple exchange rates. He pointed out that the fuel subsidy had drained $84.39 billion from the public treasury between 2005 and 2022 in a nation needing substantial infrastructure and social services improvements. He also highlighted the debts accrued by the state oil firm, NNPCL, due to unsustainable subsidy payments.

Upon taking office, Tinubu found no provision for fuel subsidy payments in the national budget beyond June 2023. Onanuga detailed that the budget allocated 97 percent of revenue to debt servicing, leaving minimal funds for recurrent or capital expenditure, which had led the previous administration to borrow extensively.

He explained that the exchange rate was also subsidized, with the Central Bank of Nigeria spending around $1.5 billion monthly to support the naira, which led to arbitrage and reduced foreign investment. On his first day, Tinubu ended the subsidy regime and floated the naira to address these issues.

Despite initial challenges, Onanuga noted that some stability is returning, with the exchange rate falling below N1500 to the dollar and prospects for further appreciation. He cited a trade surplus of N6.52 trillion in Q1, compared to a deficit of N1.4 trillion in Q4 of 2023, and renewed interest from investors as signs of improving economic confidence. Loans from the World Bank, AfDB, and Afreximbank are also bolstering Nigeria's financial standing.

Onanuga highlighted initiatives to control inflation, particularly food inflation, through increased agricultural production and state-led programs to sell food at lower prices. He pointed out the administration's significant investments in dry-season farming and incentives provided to farmers.

He concluded by comparing Nigeria's economic challenges to those faced by the USA and Europe, stressing that the Tinubu administration is diligently working to overcome these difficulties. He expressed optimism, recalling how Nigeria had surmounted economic challenges in the past and expressing confidence that the current difficulties would also be overcome.

"Our country faced economic difficulties in the past, an experience captured in folk songs. Just like we overcame then, we shall overcome our present difficulties very soon," Onanuga stated.