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The Central Bank of Nigeria, CBN, on Monday urged the
Federal Government to fast-track the passage of the Petroleum Industry Bill.
The CBN said this will serve as a strategic fiscal measure
of boosting revenues and protecting the economy from the potentially dangerous
implications of recent negative developments in the global economic
environment.
The demand was part of the resolutions by the retained the
bank’s Monetary Policy Committee, MPC, which met in Abuja.
At the end of the meeting, members resolved to retain the
Monetary Policy Rate, MPR, which is the lending rate in the country’s banks, at
12 per cent, with a corridor of +/- 200 basis points around the mid-point.
The Committee also retained the Cash Reserve Ratio, CRR, at
12 per cent and the Liquidity Ratio at 30 per cent.
The CBN Governor, Lamido Sanusi, underlined the importance
of the PIB to the growth of the country’s economy, pointing out that the law
remained pivotal to increasing the revenue generation potentials of government.
He said the strategic importance of the sector to Nigeria’s
economy, particularly recent decreasing contributions of the sector to the
country’s gross domestic product, GDP, demands that all stakeholders must take
steps to get the proposed law passed without delay.
Sanusi, who spoke extensively on the various economic and
fiscal challenges in the Euro zone, the United States and Asian countries, said
the implications for primary produce exporting countries, including Nigeria,
was huge.
According the CBN boss, Nigeria’s macro-economic stability
may continue to be threatened, particularly in view of the growing uncertainty
in the global economy and the dwindling contributions of the oil sector to real
GDP growth.
While commending the Federal Government for its
determination to bridge the budget deficits and promote prudence in public
finance, pointing out that in spite of the positive accretion of the foreign
reserves, which peaked at $43.849 billion as at the end of last year, the
economic climate still demands serious caution in fiscal and monetary measures
to avert any likely macro-economic instability in the economy.
“In spite of the slow progress made in the resolution of the
Euro zone crises, the prospect of recession has yet not been completely averted
in the near term,” Mr. Sanusi said. “Developments in the domestic economy in
the past three months highlighted some new pressure points to macroeconomic
stability.”
The Committee, he said, expressed the view that shocks to
the economy could come from significant fall in the demand for crude oil at the
international market, leading to a fall in oil prices and government revenues,
weaker exchange rate, rising inflationary pressures and depletion in external
reserves.
The Committee also noted the drop in headline inflation in December
2012, although it also recognised that core inflation had risen, driven mainly
by cost-push factors even in the face of sluggish growth in the monetary
aggregates.
On the 2013 budget, the Committee cautioned against
complacency over government revenues, despite the high level of oil prices at
the moment, pointing out that the uncertainty in global demand and supply of
crude oil, and weak performance of non-oil and VAT revenues must be augmented
by earning from other sources.
He said the passage of the PIB would help attract fresh
foreign investments into the sector with the attendant implications for its
improved contributions to the GDP and other positive multiplier effects on the
broad sectors of the economy.
On the MPR, the CBN Governor said the Committee opted to
retain the rate at 12 per cent in view of the medium and long term effects on
the economy. These include the need for prudence to hold and monitor
developments between the current meeting and the next with a view to knowing
whether an adjustment of the rate would be necessary in government’s efforts to
ensure macro-economic stability in the country.