Despite the economic outlook, the Central Bank of Nigeria(CBN) has urged Nigerians to keep hope alive as forecasts by three fiscal and monetary authorities have shown that the economy would bounce back before or by the year end.
According to the apex bank in its communiqué at the end of Monetary Policy Committee (MPC) meeting last week in Abuja, three fiscal and monetary authorities: the Federal Government of Nigeria(FGN), the International Monetary Fund (IMF) and the Central Bank of Nigeria (CBN) have given assurances that the economy would grow by 3.52 per cent (CBN), 4.20 per cent (FGN) and 3.40 per cent (IMF).
The communiqué states: “Members noted that though the global economy was progressively weakening due to the various headwinds confronting the recovery, in Nigeria, output growth has been sustained as a result of the combination of development finance interventions by the Bank and fiscal stimulus by the Federal Government. Members noted that in the last three years, the CBN has injected over N9 trillion into the economy, in addition to offering two- year moratorium for 10-year long-term loan facilities. The committee believes that these interventions have significantly helped engender growth. However, in light of the persisting pressures on inflation, the committee encouraged the Bank to maintain a close watch on the inflationary implications of the interventions.
“The MPC was concerned that within a four-month period, inflation had accelerated aggressively by 280 basis point from 17.71 per cent in May 2022 to 20.52 per cent in August 2022. The Committee was thus, of the view that given the primacy of its price and monetary stability mandate, it was expedient that significant focus must be given to taming inflation.”
“The Committee was therefore of the view that a hold or loosen option was not in consideration at this meeting. This is also because a loosening will further widen the negative real interest rate gap and worsen the financial market conditions, as savings mobilization and investment inflows would decline further. It was also of the view that with the aggressive policy normalization in Advance economies, loosening the stance of policy would result in a sharp depreciation of exchange rate, leading to further hike in capital outflows.
As regards a hold decision, this would mean a continuous deterioration in real earnings of fixed income earners and the livelihood of middle- and low-income households.