Uche Usim, Abuja
The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN), last week raised the red flag that the economy was treading precariously on the path to another recession.
The CBN Governor, Godwin Emefiele, who read the communique after the 263rd MPC meeting held in Abuja explained that the economy slowed to 1.95 per cent and 1.50 percent within the first and the second quarter of 2018 respectively.
He said the MPC identified rising inflation and pressure on the external reserves created by the intensified capital flow reversal, as amplified by the bearish trend in the equities market, even though the exchange rate remained very stable.
The MPC, he added, was also concerned over the potential impact of liquidity injection from the election related spending and increase in Federation Account Allocation Committee (FAAC) distribution, which was rising in tandem with increase in oil receipts.
He had earlier warned that the Federal Government’s spending pattern showed it was not ready to save for the rainy day. As a panacea, “the MPC called on the government to fast track implementation of the 2018 budget to help jump start the process to sustainable economy recovery and to facilitate passage of the Petroleum Industry Bill in order to increase contribution to the overall GDP”, Emefiele said.
For economic watchers, CBN’s warnings are not coming as a surprise considering that the issue of economic contractions, when juxtaposed against the nation’s N22.4 trillion debt stock and shrinking reserves, show clearly that Nigeria is in dire straits. Worse still, the passage and full implementation of annual budgets have constantly been immersed in the dirty waters of politics at the expense of the economy.
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Moreover, the National Bureau of Statistics (NBS) and the International Monetary Fund (IMF) have never minced words in explaining that the economy, though out of recession, still remained very frail and highly susceptible to cyclical shocks, if not urgently nursed to full recovery. They spotted poor growth in the non-oil-non-agricultural sector (representing about 65 per cent of the economy) as a challenge that needed to be tackled aggressively.
The IMF said difficulties in accessing financing and high inflation continued to weigh on companies’ performance and consumer demand, even though it recognised that government authorities had begun addressing macroeconomic imbalances and structural impediments through the implementation of policies underpinning the Economic Recovery and Growth Plan (ERGP).