The Monetary Policy Committee has expressed displeasure over dwindling economic recovery in Nigeria.
The committee at its just concluded meeting observed available forecasts of key macroeconomic indicators, which pointed to a fragile economic recovery in the second quarter of the year.
It, however, expressed concern over the increasing fiscal deficit estimated at N2.51 trillion in the first half of 2017 and the crowding out effect of high government borrowing.
The MPC, while urging fiscal restraint to check the growing deficit, welcomed proposals by government to issue sovereign-backed promissory notes of about N3.4 trillion for the settlement of accumulated local debt and contractors’ arrears.
The MPC, therefore, advised the management of the Central Bank of Nigeria to monitor the release process of the promissory notes to avoid an excessive injection of liquidity into the system, thereby offsetting the gains so far achieved in inflation and exchange rate stability.
On the outlook for financial system stability, the committee noted that in spite of the resilience of the banking sector, the prolonged weak macroeconomic environment has continued to impact negatively on the sector’s stability.
It reiterated its call on the apex bank to sustain its intensive surveillance of deposit money banks’ activities for the purpose of promptly identifying and addressing vulnerabilities.
The committee also called on the Deposit Money Banks to support economic recovery and growth by extending reasonably priced credit to the private sector.
It warned that 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, expected to drive the growth impetus for the rest of the year, must be pursued relentlessly.
The committee expected a 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, to be firmly anchored, to enhance confidence and sustainability of economic recovery.
It expressed satisfaction with the gradual but consistent decline in inflationary pressures in the domestic economy, adding that its substantial base effect, continuous improvements in the naira exchange rate across all segments of the foreign exchange market and considerable signs of improved investments inflows.
The committee welcomed the move by the fiscal authorities to engage the services of asset-tracing experts to investigate the tax payment status of 150 firms and individuals in an effort to close some of the loopholes in tax collection towards improving government revenue.
