The Monetary Policy Committee
(MPC) of the Central Bank of Nigeria (CBN), on Tuesday, warned the Federal
Government to learn to save heavily from current improved crude oil sales for
the rainy day.
CBN Governor, Mr Godwin Emefiele,
who read the communique of July MPC meeting in Abuja, said the committee, while
discussing the economic report, observed that as the prices of crude oil
increased in 2017 and 2018, the monthly allocation to various levels of
government also increased, suggesting that Federal Government was not conscious
of saving for the rainy day.
He said the committee had called
on the apex bank to continue to build on the progress already made in arresting
the trend to sustain the moderation in food inflation.
Emefiele said the MPC noted with
satisfaction the fourth consecutive quarters of growth of real Gross Domestic
Product (GDP) and the positive growth outlook in the domestic economy.
“This is shown by the sustained
improvement in the manufacturing and non manufacturing purchasing managers
indices in the second quarter of the year,” he said.
He said the committee was,
however, concerned about the liquidity impact of the 2018 expansionary fiscal
budget and increasing FAAC distributions due to rising prices of crude oil as
well as the build up to election related activities.
On the declining foreign reserves
from $47.7 billion in May to $47.2 billion in June, Emefiele said the
development had nothing to do with politics as being insinuated.
“What is happening is as a result
of US Federal Reserve Bank normalisation. Since the interest rate has gone up
in the US, and other advanced economies, in an attempt to stimulate their
economies, these money that moved into the emerging economies are now being
taken back and this means there will be so much outflow of cash than inflows.
And of course we have our own share of it.
“But it must be noted that
Nigeria has performed better than other emerging markets around the world, with
a stabilised exchange rate because we have been able to build enough buffers to
support our currency and that is why the exchange rate has remained stable.
“Countries like South Africa and
others have had their currencies depreciated but the Naira remains stable at
N360/$ at this time,” he added.
On currency swap update, the CBN
Governor said: “China remains Nigeria largest trading partner and we are saying
that those trading can be paid for using renminbi instead of dollars, because
people who are importing using renmimbi we are offering some discounts since we
have this soft deal with the Bank of China and we are encouraging people to
embrace the use of renminbi for trade between Nigeria and China.”
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