Central Bank of Nigeria (CBN) Governor, Mr Godwin Emefiele has set post-election agenda for the nation’s monetary policy
According to Emefiele, the bank’s current monetary policy stance is expected to continue while inflation is estimated to rise to 12 per cent and moderate thereafter.
The CBN governor made the projections at “BusinessDay Post-Election Economic Agenda Conference’’ on Thursday in Lagos.
He hinged the monetary policy stance of the bank on rising inflation expectations.
The CBN boss, however, noted that the bank would adjust the policy rate in line with unfolding conditions and outlooks.
According to him, just as in the previous year, the bank will continue in its drive to ensure that the policy interest rate is set to balance the objectives of price stability with output stabilisation.
While basing the inflationary projection on productivity gains in the agriculture and manufacturing sectors, he said the Gross Domestic Product (GDP) would be expected to pick up in the first half of the year.
This, he attributed to the continued efforts at driving indigenous production in high-impact real sector activities.
On the exchange rate policy, Emefiele said the bank in spite of expected pressures from volatility in the crude oil markets, would maintain its stable exchange rate over the next year.
According to him, Gross stability is projected in the foreign exchange market, given increased oil production and contained import bill.
Emefiele expressed optimism that the country’s Balance of Payments would remain positive in the short-term, adding that the current account balance could improve further if oil prices continued to recover.
He assured that this would be “supported by improved non-oil performance as diversification efforts begin to yield results to reduce undue imports.”
While warning that the issues that led to the economic crisis between 2015 and 2017 remained visible, Emefiele stressed the need to significantly increase the country’s policy buffers, including fiscal measure, to increase its external reserve.
He also reiterated the need to diversify the revenue structure of the Federal Government in order to reduce dependence on direct proceeds from the sale of crude oil
The CBN boss advised that cheap financing be provided to boost local production of priority goods in critical sectors of the economy in order to reduce reliance on foreign imports.
Emefiele, who also used the platform to highlight the efforts made by the CBN in the past five years in monetary policy and development finance, disclosed that the weakening of the Naira impacted the balance sheets of domestic banks.
The governor, however, said the bank took some measures such as monitoring the financial position and performance of supervised institutions and the assessment of the risk profile and governance management practices of banks to guarantee financial stability.
He listed other efforts by CBN in ensuring financial system stability and the promotion of sustainable economic development to include the establishment of the investors and exporters’ window.
Emefiele also identified the conservation of foreign exchange through the restriction of access to foreign exchange on 43 items, and increased lending to the agriculture and manufacturing sectors as another measure.
The governor, while soliciting continued support of policy measures that restrict import of items that could be produced in Nigeria, expressed optimism that the economy in post-May 2019 would witness growth and reduced unemployment rate.