The Monetary Policy Committee of the Central Bank of Nigeria has warned Nigerians to brace for a longer period of low revenue from oil sources, which would necessitate hard and uncomfortable choices.
The committee, at the end of its first meeting for 2016 in Abuja, observed that while the period of low oil prices, which started in 2005, lasted for a maximum of eight months, the current situation was expected to continue over a longer period of time.
The CBN Governor. Mr. Godwin Emefiele, further disclosed that
the development would necessitate huge sacrifices from Nigerians. Crude oil prices had declined from a peak of $114 barrel in July 2014 to $30.25 per barrel on Tuesday, January 26, 2016.
The CBN governor said since oil prices is on a steady decline, certain trade-offs would have to be envisaged and accommodated.
He said, “Consequently, it is imperative to brace for a longer period of low government revenues from oil sources, which would necessitate hard and uncomfortable choices as the economy transits to more sustainable sources of revenue, consistent with the economic realities and strategic objectives of the country. In the circumstance, certain trade-offs must be envisaged and duly accommodated.”
He added, “Consequently, the bank is fine-tuning the framework for foreign exchange management with a view to ensuring a more effective and liquid foreign exchange market, taking into account Nigeria’s strategic development priorities, with the policies being designed within an environment of regularly ensuring consistency with monetary and fiscal policies.”
He continued, “To this end, the committee once again urged the Deposit Money Banks to improve lending to the real sector as part of their patriotic obligations to the country, and enjoined the management of the central bank to continue to explore ways of incentivising lending to employment and growth-generating sectors, particularly the SMEs.”
Asked if CBN would consider forcing the banks to lend to the real sector, Emefiele stated that inasmuch as it would prefer that the DMBs should increase lending to the real sector, it would be practically impossible to force them to do so due to the fact that the banks were established to make profit.
Emefiele further revealed that, “We don’t have any immediate plan to devalue the naira. However, we are already working on different scenarios; the models are being worked on.”
On the introduction of the N50 stamp duty charge, Emefiele explained that the decision was taken to support the Muhammadu Buhari government in its bid to generate more revenue due to the drop in oil prices, and build some very important infrastructures that would be beneficial to all Nigerians.
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