The Central Bank of Nigeria (CBN), said the economy will continue to improve in the days and years ahead.
Speaking at the CBN’s 24th seminar for finance correspondents and editors in Awka, Anambra State yesterday, the CBN Governor, Mr Godwin Emefiele said he is “hugely optimistic that improved outcomes will be recorded in our work towards taming inflation, bringing down interest rates and guaranteeing exchange rate stability.”
To achieve this, the CBN, he said is “consistently devising ingenious approaches to solve our peculiar challenges and will continue to learn from the experiences of other countries, particularly developing nations.”
Emefiele however lamented that “the major challenge has been structurally-induced inflation, which has presented a dilemma to policy makers on whether to align the rates with socially desired or policy consistent outcomes.”
To address these challenges, the CBN he said “has embarked on massive monetary stimulus through direct interventions in sectors that hold immense benefits for the broader economy.”
Such interventions have been in agriculture, micro, medium and small scale enterprises (MSMEs), power sector, aviation and youth entrepreneurship, among others.
These measures he said were necessitated by the liquidity (and credit) crunch that followed the global financial crises.
The CBN, Emefiele said “has consistently sought to formulate interest and exchange rate policies that are conducive to the development of domestic private industrial activities, while taking due cognizance of other macroeconomic variables.”
Speaking on foreign exchange (forex) and interest rate developments in the country, Emefiele said the apex bank recently introduced flexbile forex regime, with forex restrictions placed on the importation of 41 items.
“This became inevitable in order to curtail fast depleting foreign reserves, occasioned by the significant demand for imports in Nigeria,” he said.
The CBN, he added, “has consistently supported the economy with robust supply of foreign exchange to deposit money banks (DMBs) particularly to meet demands for invisibles such as school fees, medical tourism and personal travelling allowance. This has led to stability in the naira exchange rate against the US Dollar.”
Emefiele warned that fundamentals of the domestic environment needed to be promoted to support domestic production and invariably curtail imports.
To this end, the CBN he said “has consistently sought to formulate interest and exchange rate policies that are conducive to the development of domestic private industrial activities, while taking due cognizance of other macroeconomic variables.”
The CBN he assured will continue to explore further avenues to ensure that interest rates are supportive of domestic production needs.
While the “Bank will continually fine tune measures to ensure and guarantee a stable exchange rate regime. With on-going recovery in economic performance.”