Nigeria’s monetary interventions over N3trn in 6 years
Nigeria is betting on numerous fiscal and monetary interventions to check rising inflation and spur growth on the heels of soaring energy costs and the impact of global supply chain disruptions from the Russian – Ukraine war.
This was part of the recommendations of the monetary policy committee meeting of Nigeria’s central bank, which met on Tuesday and decided to retain the benchmark interest rate at 11.50%, the asymmetric corridor of +100/-700 basis points around the MPR, the CRR at 27.5 per cent, and retain and the Liquidity Ratio at 30 per cent.
Nigeria has pumped over 3 trillion naira into different sectors of the economy through several intervention programmes in an attempt to stimulate economic growth.
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The MPC noted, “Available data on key macroeconomic indicators suggest the likelihood of subdued output growth for the Nigerian economy for most of 2022 due to the dampening impact to the growth of rising energy prices, tightening external financial conditions as some Advanced Economies pursue interest rate lift-off, as well as the persistence of legacy security and infrastructural problems. It, therefore, recommended, “Monetary and fiscal stimuli remain in place to continue to support the recovery until the downside risks to growth and the upside risks to inflation dissipate substantially”.
The Committee also observed with concern, the marginal increase in headline inflation (year-on-year) to 15.70 per cent in February 2022 from 15.60 per cent in January 2022, a 0.10 percentage point uptick.
An importation of dirty fuel in February has disrupted the supply cycle leading to dry fuel pumps across the country. The lingering scarcity, as well as an increase in electricity tariff now fuel inflation.
Again, the Committee noted that with sustained interventions by the Central Bank in various sectors of the economy and broad fiscal support to tame these legacy structural constraints, “price development will moderate as output growth improves”.
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The MPC, therefore, urged the fiscal authorities to seek innovative ways of addressing the current critical supply-side challenges confronting the economy, to enable the unhindered transmission of all the recently deployed fiscal and monetary stimulus to the real economy.
Click here to read the communique from the CBN.