- The government has been warned by the Central Bank of Nigeria to save for the future
- The apex bank frowned at what it described as “growing FAAC distribution” as oil revenue rise without a robust savings for the future
The Central Bank of Nigeria (CBN) has warned the federal and states goverment of the consequences of not saving for the ‘rainy day’.
The warning comes as oil prices maintain a sustained recovery averaging $57 per barrel with consequent increase in oil revenue distributed monthly to the federal, states and local governments.
Daily Trust reports that rising from its 260th Monetary Policy Committee (MPC) and the first for 2018, the CBN frowned at what it described as “growing FAAC distribution” as oil revenue rise without a robust savings programme to wade-off future shocks from falling oil prices since Nigeria’s economy is still largely dependent on oil revenue. Already, oil prices are showing signs of falling again.
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The CBN governor, Godwin Emefiele said: “The MPC observed increasing monetization of oil proceeds as evident in the growing Federation Accounts Committee (FAAC) distribution, relative to the 2017 level of disbursements. The Committee urged the Government to initiate strong stabilization programmes and to freeze the growth in its aggregate expenditure and FAAC distributions in order to create savings; needed to stabilize the economy against future oil price related shocks."
On the key monetary policy rates, the CBN governor said all the nine members who attended the MPC meeting voted to retain all key rates to consolidate on the gains already recorded in the economy as changing positions may erode all that has been achieved in the past one year.
“On the argument to hold, the Committee believes that key macroeconomic variables have continued to evolve in a positive direction in line with the current stance of macroeconomic policy and should be allowed more time to fully manifest” he said.
He added that the committee thus voted to retain the MPR at 14.0 per cent; CRR at 22.5 per cent; liquidity ratio at 30.0 per cent; and asymmetric corridor at +200 and -500 basis points around the MPR.
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Legit.ng earlier reported that Central Bank of Nigeria (CBN) injected 210 million dollars into the inter-bank Foreign Exchange Market to ensure availability and meet customers’ requests in various segments of the market.
Giving a breakdown of the amount, the acting director, Corporate Communications, Isaac Okorafor, said in Abuja on Monday that the wholesale segment of the market received 100 million dollars, while Small and Medium Enterprises (SMEs) segment received 55 million dollars.
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