The Central Bank of Nigeria Monetary Policy committee meeting has called for an early finalisation of the 2017 Federal Budget by the authorities concerned, and the resolve to pursue a non-oil driven economy.
The committee, while having its first statutory fiscal meeting in 2017, said this would go a long way in stimulating aggregate demand and restoring confidence in the economy.
It expressed hope that given the thrust of the 2017 budget and the accompanying sectoral policies, output growth should resume in the short to medium term.
The Committee also urged the authorities to seriously consider using the Public Private Partnership model in its infrastructure development programme as a means of cushioning any possible shock to budgeted revenue.
However, it reiterated the need for the Federal Government to be more inward-looking and hasten efforts towards economic diversification to support the domestic economy and improve life for the Nigerian people.
The committee explained that the medium term outlook, based on available data and forecast of key economic variables, indicated a more resilient economy in 2017. It said, “Growth is expected to turn positive in fiscal 2017, as prior policy lags converge and the fiscal space becomes more accommodative.
“In addition, the agricultural sector is expected to play a bigger role in driving growth, given the expansion of the Anchor Borrower Programme, as well as other developmental initiatives of the Government. Likewise, the prospects for moderation of price developments appear to be strengthening on the heels of positive developments in the food sub-sector.”
The Committee identified the downside risks to this outlook to include the possibility of a slower-than-expected rate of global economic activity, fluctuating oil prices and production shut-ins due to vandalism of oil installations. It also noted that money supply (M2) grew by 19.02 per cent in 2016, being 8.0 percentage points higher than its programmed limit.
The committee underscored the necessity of keeping the economy adequately lubricated in the face of declining output. Growth in Net Domestic Credit was 24.79 per cent at end-December 2016, being 17.94 per cent above its provisional benchmark for 2016.
Likewise growth in net credit to government, at 58.84 per cent, surpassed its programmed target of 47.4 per cent.
In effect, all the major monetary aggregates exceeded their programmed provisional benchmarks for fiscal 2016. Total foreign exchange inflows through the CBN increased significantly by 82.45.
