The Central Bnk of Nigeria (CBN) says its latest monetary policy thrust is targeted at maintaining price stability in the face of hostile macroeconomic conditions precipitated by Covid-19 pandemic and, more recently, the Russian-Ukrainian war.
The apex bank governor, Godwin Emefiele, told Diplomatic and Consular Missions in Nigeria on Tuesday that despite the constraining effect from global conditions, short-term outlook of the Nigerian economy remained stable and is looking up.
“As at the time of the last MPC meeting, we noted the increasing likelihood of a global recession in 2023. The broad outlook for the recovery of both the global and domestic economies remain uncertain with the path to full recovery clouded by significant downside risks.
“The key risks remain the lingering headwinds from the Russian-Ukraine war, heightened inflationary pressure across several economies and sharp slowdown of economic activities in China with the resurgence of COVID-19 pandemic across its major cities.
“The steady pick-up of economic activities observed throughout 2022 is expected to continue in 2023, keeping recovery on-track. This follows programmed measures to mitigate external shocks, curtail domestic constraints, strengthen economic fundamentals, elicit structural rebalancing, and boost long-run prosperity.
“The continued high level of insecurity; perennial scarcity of Premium Motor Spirit (PMS) and high cost of other energy sources; increased spending towards the 2023 general elections; rising cost of debt servicing; and deteriorating fiscal balances, remain the key sources of shocks to the Nigerian economy.
“Regardless of existing fragilities and relentless exogenous threats, the Nigerian economy has so far largely withstood powerful global pressures.” He said.
Emefiele noted that the ape bank opted for monetary tightening and naira redesign as well as cash withdrawal limits to, among others objectives, reduce inflation in the system.
“Further monetary tightening was considered appropriate, because a loosening or hold decision under a double-digit inflationary condition will be tantamount to an immediate reversal of the downward trend in inflation.
“We also believe that the current naira redesign and cash withdrawal limit policies, by moderating currency outside the banking system could further engender disinflation”
“Our principal aim, with the currency redesign initiative, is to make our Monetary Policy decisions more efficacious and like you can see; we have started to see inflation trending downwards and exchange rates relatively stable.
“Secondly, we aim to increase financial inclusion in the country by reducing the number of the unbanked population. Thirdly, our aim is to support the efforts of our security agencies in combating banditry and ransom-taking in Nigeria through this program and we can see that the Military are making good progress in this important task.”