The Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, has predicted a spike in the headline inflation to 12 per cent before scaling down this year just as the Gross Domestic Product (GDP) is expected to pick up in the first half of the year due to the continued efforts of the real sector of the economy.
According to Emefiele, who stated this Thursday in Lagos during the BusinessDay Post-Election Economic Agenda Conference, the apex bank would continue in its drive to ensure that the Monetary Policy Rate (MPR) is set to balance the objectives of price stability with output stabilisation.
While basing the inflationary projection on productivity gains in the agricultural and manufacturing sectors, he said the Gross Domestic Product (GDP) would be expected to pick up in the first half of the current year owing largely to the continued efforts at driving indigenous production in high-impact real sector activities.
On the exchange rate policy, he said the bank, despite expected pressures from the 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. The apex bank boss also harped on 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.
Furthermore, he advised that cheap financing be provided to boost local production of priority goods in critical sectors of the economy 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. However, he 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