2019 Election Spending May Increase Inflation – CBN

In a bid to caution politicians against excessive spending ahead of the 2019 general elections, the Central Bank of Nigeria, says anticipated spending may have “inflationary effects” on the country’s economy.

This was disclosed by the CBN Deputy Governor, Aisha Ahmad, during the Bank’s April monetary policy committee meeting in Abuja.

Ahmad also called for quick passage of the 2018 Budget, saying it will boost investment and economic output across the nation.

She said: “The anticipated huge fiscal spending for the proposed 2018 budget and preparations ahead of the 2019 elections may also have inflationary effects.

“This in itself would obviously call for a proactive and cautious monetary policy response to ensure there is no upward pressure on inflation. Thus, I would encourage quick passage of the 2018 appropriation bill by the national assembly, to keep fiscal policy on track, boost investment, employment and economic output for the benefit of the citizenry.

“It is my opinion that monetary policy considerations at this time should prioritize reduction in the general price level, exchange rate stability, and sustaining the fragile economic growth.

“We must – while we still can – encourage the positive momentum in capital flows and accretion to reserves, while accelerating the downward inflation trajectory.”

Recall that the National Bureau of Statistics (NBS) disclosed last month that Nigeria’s inflation rate dropped from 14.33 in February to 13.34 per cent in March year-on-year.

The bureau stated in its Consumer Price Index report, the figure showed 14 consecutive reductions in inflation rate since January 2017.

Nigeria’s inflation as at January 2017 was over 18 percent.