CBN gov gives notice of tough, rough economy

CBN gov gives notice of tough, rough economy

Nigerians have been told to brace up for a looming tough and rough years.

Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, raised the alert, yesterday, when he appeared before the Senate Committee on Banking, Insurance and other Financial institutions, as part of his reconfirmation hearing.

He spoke just as Chief Executive Officer of Financial Derivatives Company Limited, Bismarck Rewane, asked Nigerians to expect an increase in the pump price of petrol.

In 2016, the Buhari administration increased a litre of petrol from N87 to N145, sparking criticism among citizens.

Emefiele, who blamed part of the country’s woes on disrespect for the rule of law, explained how the CBN led the country out of recession, warned that going forward, saboteurs and others who flout economic policies of the government would be prosecuted.

“The road ahead is tough and rough. I want to appeal to our people to respect the policies of the country. We always put good policies in place, but implementation is a problem.

“We have a lot of saboteurs. We have people who don’t respect our policies. Those who intend to undermine our policies will be brought to justice. This is what we have to do,” he declared.

Emefiele also addressed the issue of multiple exchange rates. The CBN boss, while responding to questions from senators, said such a policy doesn’t exist.

“People have raised issues with multiple exchange rate. Today, our rates have converged. We have multiple windows and we have no apologies for it. We have a responsibility to provide exchange rates for everyone. There is no multiple exchange rate, but there are multiple windows.”

Emefiele warned against the nation’s growing population and explained that if not properly managed, it will become a liability.

“We just returned from IMF programme. Nigeria is estimated to be over 420 million population by 2050. It means we will be more than the United States in terms of population. We need to provide employment and opportunities for our rural population. We need to prepare for this boom,” he said.

In a presentation  he made at the Lagos Business School, Rewane said there were indications that the price of fuel would rise because government is working towards reducing subsidy payments.

He described subsidies as a huge drain on government’s revenue, adding that the World Bank put Nigeria’s total subsidy bill in 2018 at N731 billion.

“A gradual reduction in subsidy payments is anticipated. Only N305 billion was set aside for under-recovery in 2019 budget; expect an increase in the pump price of fuel,” he said.

“Forty per cent shortfall in provision for subsidies (under-recoveries) points to possible price increases.”

Rewane added that hike in price of petrol would result in high inflationary pressure.

He described the 2019 budget as counter-cyclical, saying the economy was in dire need of a boost.

He said with expenditures much higher than sustainable revenues, the fiscal deficit had widened by 2.15 per cent to N1.9tn, adding that the supplementary budget could not be avoided.

“Oil revenues are projected to decline due to the impact of OPEC quota on Nigeria’s oil output level,” he added.

On the new minimum wage, he said internally generated revenue remains the key to funding it, adding that it is not sustainable to rely on the federal accounts allocation committee (FAAC).

Rewane said the capacity of the economic management team will determine the success of President Muhammadu Buhari in the second term.