CBN asks NASS to cooperate with FG

In view of imminent recession staring at the economy, Central Bank of Nigeria (CBN) on Tuesday urged the National Assembly (NASS) to fully cooperate with the Federal Government in coming up with a budget that reflects our new realities.

At the end of the Monetary Policy Committee (MPC) number 129th meeting on Tuesday, the bank also retained baseline interest rate at 13.5 percent along with all other monetary policy rates.

Reading the communique of the meeting, Governor of the bank, Mr. Godwin Emefiele said “overall medium-term outlook for the global economy remains uncertain with increased deterioration in financial market conditions and weak global output growth.

“On the domestic front, available data on key macroeconomic variables indicate the likelihood of subdued output growth for the Nigerian economy in 2020.

“Based on the current downturn in oil prices, staff projections indicate that output in 2020 would be less than earlier envisaged.

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“The Committee noted the continued rise in domestic prices; the glut in oil supplies and low oil prices in the wake of the current global shocks; exchange rate pressure and other domestic monetary and fiscal responses to the evolving crises.

In arriving at a decision to retain the MPR at 13.5 percent; retain the asymmetric corridor of +200/-500 basis points around the MPR; retain the CRR at 27.5 percent, and also retain the Liquidity Ratio at 30 percent, MPC “took into cognisance the impact of the decline in oil prices on accretion to external reserves and the emergence of exchange rate pressures.”

According to Emefiele, the committee, while endorsing CBN management’s prompt response with the adjustment of the exchange rate to uniform market rates and the removal of distortions, however, took note of the likely impact of the exchange rate adjustment on the economy.

It “noted the weakened revenue position of the Federal Government, arising from the sharp drop in oil prices” and “reiterated the need for government to urgently reduce reliance on oil revenue by gradually diversifying the economy and improving tax collection.”

He explained that the monetary policy stance arrived at the meeting took cognisance of the need to address the unfolding unfavorable macroeconomic developments, rein in inflation, support growth, and employment through the extant interventions and recent initiatives, check capital outflows and support external reserves accretion, and dampen pressure and ensure foreign exchange market stability.

NIGERIAN TRIBUNE