Nigerian government not willing to save for rainy day – CBN cries out
(CBN), on Tuesday, warned the Federal Government to learn to save
heavily from current improved crude oil sales for the rainy day.
CBN Governor, Mr Godwin Emefiele, who read the communique of July MPC
meeting in Abuja, said the committee, while discussing the economic
report, observed that as the prices of crude oil increased in 2017 and
2018, the monthly allocation to various levels of government also
increased, suggesting that Federal Government was not conscious of
saving for the rainy day.
He said the committee had called on the apex bank to continue to build
on the progress already made in arresting the trend to sustain the
moderation in food inflation.
Emefiele said the MPC noted with satisfaction the fourth consecutive
quarters of growth of real Gross Domestic Product (GDP) and the
positive growth outlook in the domestic economy.
"This is shown by the sustained improvement in the manufacturing and
non manufacturing purchasing managers indices in the second quarter of
the year," he said.
He said the committee was, however, concerned about the liquidity
impact of the 2018 expansionary fiscal budget and increasing FAAC
distributions due to rising prices of crude oil as well as the build
up to election related activities.
On the declining foreign reserves from $47.7 billion in May to $47.2
billion in June, Emefiele said the development had nothing to do with
politics as being insinuated.
"What is happening is as a result of US Federal Reserve Bank
normalisation. Since the interest rate has gone up in the US, and
other advanced economies, in an attempt to stimulate their economies,
these money that moved into the emerging economies are now being taken
back and this means there will be so much outflow of cash than
inflows. And of course we have our own share of it.
"But it must be noted that Nigeria has performed better than other
emerging markets around the world, with a stabilised exchange rate
because we have been able to build enough buffers to support our
currency and that is why the exchange rate has remained stable.
"Countries like South Africa and others have had their currencies
depreciated but the Naira remains stable at N360/$ at this time," he
added.
On currency swap update, the CBN Governor said: "China remains Nigeria
largest trading partner and we are saying that those trading can be
paid for using renminbi instead of dollars, because people who are
importing using renmimbi we are offering some discounts since we have
this soft deal with the Bank of China and we are encouraging people to
embrace the use of renminbi for trade between Nigeria and China."
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