CBN urges FG to save oil revenues for the future
NEWS DIGEST – The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has advised the government to develop a savings culture in order to provide the needed stability for the economy against unforeseen oil-related challenges.
In the 117th communique of the re-constituted MPC issued at the end of its first meeting in 2018 in Abuja, on Wednesday, the federal government was advised to check its distribution of oil revenue to states.
CBN governor, Godwin Emefiele, stated that the monies shared to states has increased in comparison to the previous year as he read the Communique.
The committee decried the recent increase in the monetization of oil proceeds as evident in the growing Federation Accounts Allocation Committee distribution to states, relative to the 2017 level of disbursements.
“The Committee urged the Government to initiate strong stabilization programmes and to freeze the growth in its aggregate expenditure and FAAC distributions in order to create savings; needed to stabilize the economy against future oil price related shocks.”
According to the committee’s report, the economy grew through agriculture, industry and trade by a total of 0.83 per cent in 2017 evident in the real gross domestic products growth.
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“A non-oil real GDP grew by 1.45 per cent in the fourth quarter of 2017, compared with a contraction of 0.76 per cent in third quarter of 2017, indicating the economy was gradually returning to a path of sustainable positive growth.”
The Committee also noted forthcoming challenges that is capable of impacting the economy, which include; 2019 election-related spending, herdsmen related violence and rising yields in the advanced economies. weak backdrop of tax revenue efforts,
Furthermore, committee members urged the National Assembly to quickly pass the 2018 Appropriation Bill to help keep fiscal policy on track and deliver the reliefs urgently needed to create employment and growth for Nigerians.
Meanwhile, Emefiele reitrated the CBN’s determination to continue providing credit at single digits interest rate to some strategic sectors of the economy to sustain growth in the country, particularly to the small and medium term enterprises (SMEs), agricultural sector and core manufacturing sectors.
Anon, he announced willingness of CBN to provide some liquidity to help settle over N2.7 trillion contractor debt with the aim of reducing the huge non-performing loans so as to aid banks in playing their roles as supporters of credit delivery in the Nigerian economy.
“As government pays off its huge contractor debts, a sizeable portion of these non-performing loans will be addressed by reducing its domestic debt profile and increasing the liquidity of the banking system,” the communique stated.
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