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Timely Implementation of ERGP’ll End Recession — CBN

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Godwin Emefiele CBN - Investors King
  • Timely Implementation of ERGP’ll End Recession

The Monetary Policy Committee of the Central Bank of Nigeria on Tuesday called for the timely implementation of the recently launched Economic Recovery and Growth Plan to take the country out of recession.

The committee, in a communique that was read by the CBN Governor, Mr. Godwin Emefiele, after its two-day meeting in Abuja, also called for the judicious execution of the 2017 budget, which was recently passed by the National Assembly.

It said while the fiscal authorities work towards the implementation of the ERGP and the budget, the apex bank should sustain its recent intervention in the foreign exchange market in order to accelerate growth and restore confidence in the economy.

However, it said there were downside risks that might limit the potential for growth.

Some of them are the possibility of low oil prices due to renewed investments in shale oil exploration and production; continuing monetary policy normalisation by the United States Fed, which may result in strengthening of the US dollar; and consequent capital reversal from Nigeria and other emerging market economies.

Also, the MPC believes that the inflation outlook does not pose significant threat as the limit of the base effect driving the current moderation in prices may have been reached.

Emefiele said, “The committee welcomes the passage of the 2017 budget and called on the relevant authorities to ensure its judicious implementation, especially the capital budget, in line with the Economic Recovery and Growth Plan.

“It, however, noted the associated risks to banking system liquidity of the envisaged fiscal injections during the remainder of the year.”

In consideration of the challenges weighing down the domestic economy and the uncertainties in the global environment, the CBN governor said the committee decided by a unanimous vote of the eight members in attendance to retain the Monetary Policy Rate at 14 per cent.

Apart from the MPR, he said the committee also voted to retain the Cash Reserves Ratio at 22.5 per cent.

Also retained were the Liquidity Ratio, which was left at 30 per cent; and the Asymmetric Window, which was left at +200 and -500 basis points around the MPR.

In reaching these decisions, Emefiele explained that the MPC was reluctant to alter the current policy configuration in any fundamental manner as its intention was to allow the existing policies to fully achieve their intended goals and objectives.

On the other hand, he said the MPC noted that the cost of capital in the economy remained high and not helpful to growth.

Emefiele stated, “The MPC was, however, concerned that loosening would exacerbate inflationary pressures and worsen the gains so far achieved in the exchange rate of the naira.

“It was also convinced that loosening would further increase the negative real interest rate as the gap between the nominal interest rate and inflation widens.”

The governor explained that the MPC urged the CBN to intensify its surveillance in order to address emerging vulnerabilities.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Economy

Inflation and Forex Mismanagement Drive Petrol Truck Prices from N7M to N25M

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The Chairman of the Independent Petroleum Marketers Association of Nigeria in the Satellite Depot branch, Akin Akinrinade, has raised an alarm over the rising cost of petrol trucks in Nigeria.

According to Akinrinade, the cost of a petrol truck has surged from N7 million in May to an astonishing N25 million at present, attributed to inflation induced by poorly managed foreign exchange rates.

Akinrinade pointed out that the forex mismanagement has significantly impacted the landing cost of premium motor spirit (PMS), commonly known as petrol, consequently leading to a surge in pump prices.

The unstable business environment, coupled with the astronomical rise in expenses, has created challenges for marketers in the downstream oil sector.

Mele Kyari, the Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPCL), highlighted in October 2023 that foreign exchange challenges have hindered private companies from importing petroleum products.

As a result, the NNPCL has become the exclusive importer of petrol.

The decision to limit private entities from importing fuel comes after President Bola Tinubu’s initiatives aimed at deregulating the fuel market.

Initially, the plan was to allow private companies to import fuel starting June 2023, aligning with efforts to balance the market after removing petrol subsidies.

The ripple effects of the soaring petrol costs are already evident, with commercial transporters increasing fares, and private car owners seeking fuel-saving alternatives.

As Christmas approaches, the surge in demand for interstate travel is expected to further elevate costs, posing financial challenges for many Nigerians amidst stagnant income levels.

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Nigeria’s Presidential CNG Initiative Allocates N100bn for CNG Buses and EV Adoption

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The Presidential Compressed Natural Gas (CNG) Initiative has allocated N100 billion to expedite the deployment of CNG buses nationwide, according to a statement released on Wednesday.

The initiative, designed to catalyze an Auto-gas and Electric Vehicle (EV) revolution in mass transit and transportation, aims to enhance sustainability and cost-effectiveness.

The statement revealed that the fund would be instrumental in supporting the adoption of auto-gas and electric vehicles, signaling a commitment to a more sustainable and economical future in the transportation sector.

The Presidential CNG Initiative plans to leverage over 11,500 CNG and electric-fueled vehicles, along with the deployment of 55,000 conversion kits.

This strategic approach is intended to reduce transportation costs for Nigerians and mitigate the challenges posed by the rising cost of living.

Under the Renewed Hope Agenda, the Presidential CNG Initiative is dedicated to realizing the President’s vision, guided by its steering committee led by FIRS Chairman Zacch Adedeji.

The statement highlighted recent achievements, including strategic technical partnerships and the ongoing commissioning of CNG Conversion centers in key states such as Lagos, Abuja, Kaduna, Ogun, and Rivers.

Several more centers are slated for commissioning in the coming weeks, reflecting the initiative’s momentum and commitment to achieving its objectives.

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Nigeria’s Power Transformation: 53 Projects Worth N122bn on Track for May 2024 Completion

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The Central Bank of Nigeria (CBN), in collaboration with the Transmission Company of Nigeria (TCN) and power distribution companies, is set to complete 53 power projects by May next year.

Valued at N122 billion, these projects aim to add over 1,000 megawatts to TCN’s wheeling capacity.

During a recent tour of three ongoing projects in Lagos, TCN’s Programme Coordinator, Mathew Ajibade, assured that the projects were not abandoned, refuting speculations.

He confirmed that work is progressing smoothly and is expected to be completed by May 2024, as initially planned.

Assistant Director/Head of Infrastructure Finance Office at the CBN, Tumba Tijani, highlighted the CBN’s support for the power sector, revealing that the bank released a loan at a 9% interest rate in August last year for the projects.

The funding, part of the Nigeria Electricity Market Stabilisation Facility-3, amounts to N122,289,344 and aims to address transmission/distribution bottlenecks, enhance supply to end-users, and unlock unutilized generation capacity.

Tijani disclosed that N85.43 billion has been disbursed into the Advance Payment Guarantee account of the 53 contractors responsible for executing the projects.

The comprehensive project list includes the delivery of power transformers, re-conductoring existing transmission lines, upgrading existing substations, and constructing 33KV line bays.

The initiative reflects a concerted effort to enhance Nigeria’s power infrastructure and meet growing energy demands.

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