Godwin Emefiele, governor of the Central Bank of Nigeria (CBN) says the country may stay longer in recession if bold bold policies are not activated to support the current fragile growth.
Speaking after the monetary policy meeting on Tuesday, Emefiele said forecast available to the committee shows that Nigeria’s recovery from recession remains very fragile and must be supported to avoided another recession.
“Available forecasts of key macroeconomic indicators point to a fragile economic recovery in the second quarter of the year,” Emefiele said in Abuja.
“The Committee cautioned that this recovery could relapse in a more protracted recession if strong and bold monetary and fiscal policies are not activated immediately to sustain it.
“Thus, the expected fiscal stimulus and non-oil federal receipts, as well as improvements in economy-wide non-oil exports, especially agriculture, manufacturing, services and light industries, all expected to drive the growth impetus for the rest of the year must be pursued relentlessly.”
He also called for the speedy implementation of the 2017 budget as well as maintained security within the country.
“The Committee expects that timely implementation of the 2017 Budget, improved management of foreign exchange, as well as security gains across the country, especially, in the Niger Delta and North Eastern axis, should be firmly anchored, to enhance confidence and sustainability of economic recovery.
“The Committee identified the downside risks to this outlook to include weak financial intermediation, poorly targeted fiscal stimulus and absence of structural programme implementation.”
Emefiele, who said he is just a messenger of the of the committee, also expressed concerns over the increase in fiscal deficit to over N2.5 trillion in the first six months of 2017.
“The MPC noted the widening fiscal deficit of N2.51 trillion in the first half of 2017 and the growing level of government indebtedness and expressed concern about the likely crowding out effect on private sector investment.
“The constrained growth in the monetary aggregates provides evidence of weak financial intermediation in the banking system arising from the constraints imposed by developments in the macroeconomy.”