he Governor of the Central Bank of Nigeria, Mr. Lamido Sanusi, has cautioned the Federal Government against excessive spending on military operations in three states in the North-East, Borno, Adamawa and Yobe, where a state of emergency was declared last week.
Sanusi, while addressing journalists
shortly after the end of a two-day Monetary Policy Committee meeting
held at the CBN headquarters in Abuja, argued that excessive spending on
military operations posed a major risk to the inflation outlook.
Headline inflation increased from 8.6
per cent in March to 9.1 per cent in April, remaining within the target
single digit range for the fourth consecutive month in 2013.
The figure, according to the central
bank boss, reflects a combination of base effect and the success of
tight monetary policy, which have led to a muted growth in the monetary
aggregates and exchange rate stability.
He said while the principal risks to the
inflation outlook remained fiscal spending and possible pressures on
the exchange rate from any attrition to reserves caused by declining
revenues as a result of output leakages, there was the need for prudence
in monetary policy action.
Sanusi said, “The committee noted with
caution the high Gross Domestic Product growth projection in view of the
extant risk factors such as widespread insecurity, weak infrastructure
and probable flooding from the projected heavy rains in some parts of
the country.
“The state of emergency in the
North-East and the accompanying military operations in that axis have
the potential to adversely affect economic activities generally,
including agricultural production and food prices as well as consumer
demand.
“In addition, the recent military action
in the North-East will result in additional spending. Although the
government has announced that there will be no supplementary budget, the
Coordinating Minister for the Economy and Minister of Finance has
already announced that there will be a drawdown on a contingency vote
embedded in the 2013 budget to cover emergencies.
“Overall, the committee is of the view
that government spending will constitute a major risk to the inflation
and exchange rate outlook, thus advising prudence in monetary policy
action at this time.”
The CBN governor also said the committee
expressed concern over the low level of credit growth to the private
sector and traced this to the crowding out effect of high growth in
credit to the public sector.
He said, “The committee noted the
N1.02tn increase in claims on the government and the N1.11tn drawdown on
savings between January and April 2013, and particularly, the
monetisation of $1bn in April 2013, being proceeds of the Excess Crude
Account.
“The combined effect of new borrowings
and reduced savings was an increase in net credit to the central
government of over N2tn in the first four months of 2013. The evidence
points to an increase in the rate of government expenditure in 2013 when
compared with 2012.”
On the country’s external reserves, Sanusi expressed satisfaction with its significant increase to $49.13bn as of May 16, 2013.
This, he noted, represented an increase of $5.3bn or 12.1 per cent above the level of $43.83bn at the end of December 2012.
The reserves level, he added, could finance approximately 13 months of import.
On the Monetary Policy Rate, the governor said the committee left it unchanged at 12 per cent.
It also retained the Cash Reserve
Requirement at 12 per cent and Liquidity Ratio at 30 per cent; with the
Net Open Position at 1.0 per cent.
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CBN Governor, when will you sum up courage to condemn Boko Haram in public? If you have done so, good. If you have not done so, too bad.
ReplyDeleteCBN Governor is an avowed Boko Haram Insurgent. I am surprised he has not been invited for questioning up till now !!!!!!!
ReplyDeleteAbeg shut up. Is it until the whole Nigeria is dead.
ReplyDeleteSpending for operations in nigeria becomes a problem?wat about spending in mali and sudan where we even lost a fighter jet and two pilots? This sanusi na real boko haram member
ReplyDeleteSpending for military operation in northern nigeria will cause inflation?what about spending in mali and sudan ?the man na real boko haram member
ReplyDeleteSanusi have nothing good to tell Nigerians even how he sanusi syphon Nigerian money to sponsor boko Haran. He is part of the system , May be Boko Haran in the present administration. Pls advised yourself and ur boko haran team to leave innocent GEJ administration alone -U can resign from central bank if u wish.
ReplyDeleteSome people really think they own this country more than the rest of us. On this boko haran matter, first GEJ was accused of weakness, second they reject his offer of amnesty, thirdly the declaration of emergency in 3 states and the use of military to chase d boko haran made the northern leaders to accuse GEJ of choosing war instead of peace and now the CBN governor is warning that GEJ should not use too much money on d boko haran issue. Please fellow nigerians,pray that the God who delivered the Istraelites from d egyptians and delivered Daniel and co from the lion's den who is the same yesterday, today and tomorrow will save Nigeria. Please pray and fast. Long live Nigeria
ReplyDelete