Economic Recovery Process Could Relapse, CBN Warns

Godwin Emefiele, governor of the Central Bank of Nigeria (CBN) has warned that Nigeria’s economic recovery process could relapse “if strong and bold monetary and fiscal policies are not activated immediately to sustain it”.

Addresing journalists shortly after Monetary Policy Committee (MPC), meeting on Tuesday, Emefiele said forecast available to the committee “point to a fragile economic recovery in the second quarter of the year”.

“Available forecasts of key macroeconomic indicators point to a fragile economic recovery in the second quarter of the year,” Emefiele said in Abuja.

“The Committee cautioned that this recovery could relapse in a more protracted recession if strong and bold monetary and fiscal policies are not activated immediately to sustain it.

“Thus, the expected fiscal stimulus and non-oil federal receipts, as well as improvements in economy-wide non-oil exports, especially agriculture, manufacturing, services and light industries, all expected to drive the growth impetus for the rest of the year must be pursued relentlessly.”

The CBN governor further called for the speedy implementation of the 2017 Budget, as well as sustaining security gains in troubled areas across in the country.

“The Committee expects that timely implementation of the 2017 Budget, improved management of foreign exchange, as well as security gains across the country, especially, in the Niger Delta and North Eastern axis, should be firmly anchored, to enhance confidence and sustainability of economic recovery.

“The Committee identified the downside risks to this outlook to include weak financial intermediation, poorly targeted fiscal stimulus and absence of structural programme implementation.”

Emefiele, who spoke on behalf of the committee expressed concern over the increasing fiscal deficit estimated at N2.51 trillion in the first half of this year.

They however called for “fiscal restraint to check the growing deficit” and also disclosed that the committee had once again resolved to retain lending rates at 14%.