Though five billion naira was earmarked for each state government to provide palliatives, only two billion have been released so far. The Minister of Finance and Coordinating Minister for the Economy, Wale Edun, confirmed yesterday in Abuja where he unveiled his programmes, that the N185 billion package was partly a loan and grant from the Federal Government.
He explained that the whole package was not released to the state governments to prevent spiral inflation as a result of too much cash in the system.
He added: “Although the sum of five billion is earmarked, you will agree with me that to release such funds across all the states, all at once, will be self-defeating because it will lead to an inflationary spiral, it will lead to the cost of the goods being sold going up, it will lead to the exchange rate moving. This explains the two billion naira that has been released as an initial intervention.”
Edun stated that the Nigerian money outside of the country is huge while cash outside of the banking system is also substantial hence the need to urgently mobilise the money back to the system to shore up the value of the naira.
“There is a lot of cash outside the system, which, if brought into the system, will increase the money supply of dollars and increase the reserves. There are funds in domiciliary accounts, which if you give people the incentive, they will utilise for investment in Nigeria. Nigerians in Nigeria have huge holdings of foreign currency in banks abroad and financial institutions abroad.
We need to provide the environment that brings those funds home to choose to invest in the Nigerian economy rather than foreign economies, which is what they are doing now. If you place money in a bank abroad, they’re investing in a foreign economy,” he added
