Nigeria
Monday, January 22, 2018 15:49
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an 22 (Reuters) – Nigeria’s central bank said on Monday a key interest rate setting meeting intended for January 22-23 will not be held due to an inability to form a quorum, adding that the benchmark rate will be maintained at 14 percent.
The decision comes because there are not enough members of the Central Bank of Nigeria’s (CBN‘s) Monetary Policy Committee (MPC) to form a quorum, the lender said in a statement.
“Under these circumstances, and in the absence of a meeting of the MPC, the CBN shall continue to maintain key monetary policy variables as decided by the last MPC meeting,” the central bank said.
On Friday, Reuters reported that the interest rate meeting was unlikely to be held because several new members of the MPC have yet to be approved by lawmakers, according to two central bank sources.
At least five of the MPC’s 12 members are due to be replaced after retiring last year.
At the heart of the matter is a stand-off between the presidency and legislature over the latter’s powers to confirm – or deny – executive nominees to key posts within the government.
After President Muhammadu Buhari appointed a top civil servant whose nomination Nigeria’s Senate had blocked, the upper parliamentary chamber is now refusing to approve other presidential nominees, including those for the MPC.
On Friday, a presidency official said he did not know when the stand-off would be resolved but it was being addressed by Buhari’s office. (Reporting
, Jan 19 (Reuters) – Nigeria’s central bank is unlikely to hold an interest rate setting meeting on Jan. 22 as scheduled as several new members of the monetary policy committee (MPC) have yet to be approved by lawmakers, two central bank sources said.
At least five of the MPC’s 12 members are due to be replaced after retiring last year. “The indications that the MPC might not hold are there because of quorum,” one of the sources told Reuters.
At the heart of the matter is a stand-off between the presidency and legislature over the latter’s powers to confirm – or deny – executive nominees to key posts within the government.
Nigeria’s upper house of parliament, the Senate, had twice refused to approve President Muhammadu Buhari’s nomination of Ibrahim Magu as the head of the financial crimes watchdog, most recently last March.
Nevertheless, Magu assumed the role of acting chief of the Economic and Financial Crimes Commission (EFCC), a move the Senate saw as an overreaching of presidential powers and a rejection of its legislative authority.
In response, the Senate is now refusing to approve other presidential nominees, including those for the MPC.
“The Senate plenary has not referred the confirmation of the deputy governor and members of the MPC to our committee because the Senate is having issues with the executive,” said Senator Rafiu Ibrahim, chairman of the Senate banking committee.
“The issue is the executive refusal to honour our decision on the confirmation of Ibrahim Magu,” Ibrahim said. “Until that is resolved the situation would remain as it is.”
A presidency official said he did not know when the stand-off would be resolved but it was being addressed by Buhari’s office. A CBN spokesman also declined to comment. The two central bank sources said a statement would be issued.
At its last meeting in November, the MPC held rates at the same 14 percent level it has kept for more than a year, to fight inflation and to attract foreign investors to support the naira
A, Jan 12 (Reuters) – Nigeria’s central bank said on Friday it had injected $262.5 million into the interbank foreign exchange market, extending efforts to improve liquidity and alleviate dollar shortages.
The bank said in a statement it had released the funds for use by businesses in the agricultural and petroleum sectors as well as airlines.
The bank said it would continue to intervene in the foreign exchange market to sustain liquidity.
he preceding year of 2017 witnessed a gradual recovery from a rather traumatic economic recession. At an annualised growth rate of 0.8% for the preceding, the economy had transited out of negative growth and can be presumed to be on the path of long-term sustained growth.
The forecasts for 2018 vary from that of the conservative IMF of 2.1% to that of the London-based ratings agency, Fitch, at 2.6 percent. Much will depend on how deftly our economic managers handle the most crucial elements of the economy.
There are absolutely no guarantees. Much will depend on how quickly we resolve the remaining issues relating to Budget 2018. We would hope and pray that both the government and the National Assembly do their part to ensure a speedy resolution and passage of the appropriation bill early enough, at the latest, not beyond February.
Equally important is the propitious holding forth of global oil prices, which currently stand at US$60.45 per barrel, the highest since 2014. It is also important that we continue on the quiet diplomacy that kept Niger Delta militants quiet while ensuring that we maintain 2.1 mpd that we had throughout much of 2017.
Jan 8 (Reuters) – Nigeria’s foreign reserves hit $40.4 billion as of Jan. 5, an increase of roughly $1 billion from December, the central bank said on Monday.
The bank said the rise reflected its “strategy to effectively manage forex demand by various sectors of the economy”, stressing restrictions on access to foreign currencies for importers of certain items.
The central bank said in a statement that its policies “had ensured a decline in Nigeria’s import bills from over $5 billion monthly in 2015 to about $1.5 billion in 2017”.
The Stanbic IBTC Bank Nigeria PMI increased to 56.8 in December of 2017 from 55.2 in the previous month. The reading pointed to the highest expansion in private sector activity since December of 2014, as buying activity and stock of purchases advanced at a record pace. In addition, new export orders rose for the fourth consecutive month and job creation continued rising. On the price front, input and output inflation eased.
jan 1 The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) responsible for monetary policy direction of the country may not hold this month, if the committee members don’t form a quorum.
Statutorily, the MPC comprises 12 members, the CBN governor (chairman), the four deputy governors, two members of the CBN board of directors, three members appointed by the president and two members appointed by the governor.
Its quorum is of six members, “two of whom shall be the governor and a deputy governor, or two deputy governors”.
The MPC meeting, usually held once in two months to set the interest rates and other key rates, starting from the month of January, all things being equal.
The monetary policy committee is the highest policy making committee of the CBN mandated to, (1) review economic and financial conditions in the economy, (2) determine appropriate stance of policy in the short to medium term, (3) review regularly, the CBN monetary policy framework and adopt changes when necessary and (4) communicate monetary/financial policy decisions effectively to the public and ensure the credibility of the model of transmission mechanism of monetary policy.
However, if the senate fails to confirm some of the nominee sent by president Buhari, this critical meeting may not hold in January as the committee may not form a quorum required by law for the meeting to take place. This is because just five members of the committee are currently available.
Mr. Suleiman Barau the CBN deputy governor (operations), retired from active service. Another deputy governor, Adebayo Adelabu (corporate services), has also been served notice of disengagement from the CBN our correspondent gathered.
Recall too that Mrs. Sarah Alade, who was deputy governor for economic policy, had in March 2017 retired and her replacement – Aisha Ahmad – is yet to be confirmed by the Senate since her nomination in October 2017.
Also recall that in April, President Muhammadu Buhari announced the appointment of Ummu Ahmed Jalingo, Justitia Odinakachukwu Nnabuko, Mike I. Obadan, Abdu Abubakar and Adeola Adetunji as non-executive directors of the CBN board. In October, he nominated Adeola Festus Adenikinju, Aliyu Rafindadi Sanusi, Robert Chikwendu Asogwa and Asheikh A. Maidugu as new members of the MPC but they are yet to be approved by the Senate.
The Senate had refused to screen Buhari’s nominees in line with its July 4 resolution to suspend all executive confirmation requests until Ibrahim Magu is removed as the acting chairman of the Economic and Financial Crimes Commission (EFCC).
“The information I have is all the MPC members including other nominees are yet to be approved by the Senate due in part to the current impasse over Magu’s clearance. Two DGs have retired, one was nominated but yet to be cleared by Senate. That means there will be no quorum for any MPC meeting in January unless they are cleared before the meeting,” Mr. Rislanudeen Muhammad, an economist told our correspondent.
Thus, should the Senate not budge; the Nigerian economy will still function based on the MPC key rates released in November 2017 irrespective of whether they reflect the current economic realities or not.
Dr. Bongo Adi, an economist and lecturer at the Lagos Business School, he doesn’t think the MPC not meeting would change anything. In the past year, the MPC has kept all key rates on hold and there is no indication they would shift positions just yet he said.
According to him, this is so because, the underlining conditions for those decisions haven’t change. Thus, if they (MPC) don’t meet, things will still remain the same and if they meet nothing might change still.
On whether the MPC’s inability to meet might affect investors’ confidence, he said that might not happen. As far as the oil price is still climbing and the exchange rate has largely remained stable, we won’t expect untoward behavior from investors he noted adding that “I don’t see any investors changing his perception of Nigeria so things will remain pretty much the same,” he said.
- Nigeria is exiting the recession but the economy remains vulnerable.
- Welcome actions to improve the power sector and business environment under the Economic Recovery and Growth Plan.
- Macroeconomic and structural reforms remain urgent to contain vulnerability and support sustainable private sector led growth.
An International Monetary Fund (IMF) staff team led by Amine Mati visited Nigeria during December 6-20, 2017 to conduct the 2018 Article IV consultation. Following the conclusion of the visit, Mr. Mati, Senior Resident Representative and Mission Chief for Nigeria at the IMF, issued the following statement:
“Overall growth is slowly picking up but recovery remains challenging. Economic activity expanded by 1.4 percent year-on-year in the third quarter of 2017—the second consecutive quarter of positive growth after five quarters of recession—driven by recovering oil production and agriculture. However, growth in the non-oil-non-agricultural sector (representing about 65 percent of the economy), contracted in the first three quarters of 2017 relative to the same period last year. Difficulties in accessing financing and high inflation continued to weigh on companies’ performance and consumer demand. Headline inflation declined to 15.9 percent by end-November, from 18½ percent at end-2016, but remains sticky despite tight liquidity conditions.
“High fiscal deficits—driven by weak revenue mobilization—generated large financing needs, which, when combined with tight monetary policy necessary to reduce inflationary pressures, increased pressure on bond yields and crowded out private sector credit. These factors contributed to raising the ratio of interest payments to federal government revenue to unsustainable levels. Reflecting the low growth environment and exposure to the oil and gas sector, the banking industry’s solvency ratios have declined from almost 15 to 10½ percent between December 2016 and October 2017, and non-performing loans have increased from 5 percent in June 2015 to 15 percent as of October 2017, although with provisioning coverage of about 82 percent.
“The authorities have begun addressing macroeconomic imbalances and structural impediments through the implementation of policies underpinning the Economic Recovery and Growth Plan (ERGP). Supported by recovering oil prices, the new Investor and Exporter foreign exchange window has increased investor confidence and provided impetus to portfolio inflows, which have helped to increase external buffers to a four-year high, and contributed to reducing the parallel market premium. Important actions under the Power Sector Recovery Program increased power supply generation and ensured government agencies pay their electricity bills. Welcome steps were also taken to improve the business environment and to address longstanding corruption issues, including through the adoption of the National Anti-Corruption Strategy in August 2017.
“However, in the absence of new policies, the near-term outlook remains challenging. Growth is expected to continue to pick up in 2018 to 2.1 percent, helped by the full year impact of greater availability of foreign exchange and higher oil production, but to stay relatively flat in the medium term. Risks to the outlook include lower oil prices, tighter external market conditions, heightened security issues, and delayed policy responses.
“Containing vulnerabilities and achieving growth rates that can make a significant dent in reducing poverty and unemployment requires a comprehensive set of policy measures.
“On the fiscal front, the mission welcomes the recent tax reforms aimed at improving tax administration, planned increases in excises, and latest steps taken to lower debt servicing costs and lengthen maturities. However, with oil prices expected to remain lower than in the past, upfront actions to mobilize non-oil revenues, including through reforming the VAT and removing exemptions, are needed while safeguarding priority expenditures, including scaling up social safety nets and infrastructure investment.
“Fiscal consolidation should be accompanied by a monetary policy stance that remains tight to further reduce inflation and anchor inflation expectations. Moving toward a unified and market-based exchange rate as soon as possible while continuing to strengthen external buffers would be necessary to increase confidence and reduce potential risks from capital flow reversals.
“Such a policy package—along with structural reform implementation, including by building on recent successes to improve the business environment, closing infrastructure gaps, and implementing the power sector reform plan——would lay the foundation for a diversified private-sector led economy. Strengthening governance and transparency initiatives, and lowering gender inequality and fostering financial inclusion would also be important.”
The team held productive discussions with senior government and central bank officials. It also met with members of parliament, representatives of the banking system, private sector, civil society, and international development partners. The team thanks the authorities and those with whom it met for the open and productive discussions, excellent cooperation, and warm hospitality.
dec 23 The International Monetary Fund (IMF) said on Friday that the Nigerian economy was still vulnerable despite the country exiting recession.
The IMF in a statement issued by its Media and Press Officer, Raphael Ranspach, welcomed the Federal Government’s actions to improve the power sector and business environment under the Economic Recovery and Growth Plan (EGRP).
The Fund said the macroeconomic and structural reforms remained urgent to contain vulnerability and support sustainable private sector led growth.
The IMF said its staff team led by the Senior Resident Representative and Mission Chief for Nigeria, Amine Mati, visited the country from December 6 to 20 to conduct the 2018 Article IV consultation, which led to this report.
However, growth in the non-oil-non-agricultural sector (representing about 65 per cent of the economy) contracted in the first three quarters of 2017 relative to the same period last year.
“Difficulties in accessing financing and high inflation continued to weigh on companies’ performance and consumer demand.
“Headline inflation declined to 15.9 per cent by end-November, from 18.5 per cent at end of 2016, but remains sticky despite tight liquidity conditions.
“High fiscal deficits – driven by weak revenue mobilisation – generated large financing needs, which, when combined with tight monetary policy necessary to reduce inflationary pressures, increased pressure on bond yields and crowded out private sector credit.”
S, Dec 4 (Reuters) – Nigeria’s central bank on Monday weakened the naira marginally, selling dollars at 307 naira each for the first time on the official interbank market, traders said.
The bank has sold $500,000 almost on daily basis to alleviate dollar shortages on the currency market at a rate which has hovered at between 305 naira and 306 naira for months. (Reporting by Chijioke Ohuocha; Editing by Toby Chopra)
ABUJA, Nov 21 (Reuters) – Nigeria’s central bank held its benchmark interest rate at 14 percent on Tuesday and said the recovery of Africa’s biggest economy from its first recession in a generation remained fragile.
Governor Godwin Emefiele said eight committee members had voted to hold the main rate, while one voted for a cut. All other policy parameters were kept unchanged.
“Inflation in particular requires very close monitoring to gain clarity on the medium-term optimum path of monetary policy,” Emefiele told a news conference.
All 15 analysts polled last week said rates would be held at 14 percent, with cuts of up to 100 basis points expected in either July or September 2018.
Official data on Tuesday showed growth of just 1.4 percent in the third quarter.
Among other risks for Nigeria, Emefiele cited low fiscal buffers.
The OPEC member’s economy shrank by 1.5 percent in 2016, its first annual contraction in 25 years. The recession was largely caused by low oil prices since the country relies on crude oil sales for around two-thirds of government revenue.
“Mr. Emefiele’s hints about future monetary easing were pretty clear. It seems that policymakers are waiting for a more substantial fall in inflation before starting to lower interest rates,” said Capital Economics analyst William Jackson.
Inflation is slowing but remained at an elevated 16 percent on an annual basis in October. At the media conference Governor Emefiele said he was optimistic consumer price-growth would moderate to one-digit levels in 2018. (Reporting by Mfuneko Toyana;
Source: http://www.centralbanknews.info/2018/01/nigeria.html
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