By Tony Obiechina
Following the growth of the Services Sector of the economy, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has predicted a fragile but promising economic growth for Nigeria in 2018.
Arising from a two-day meeting on Wednesday, the reconstituted MPC said it based its forecast on the recent data by the National Bureau of Statistics which indicated, among other things, that real Gross Domestic Product (GDP) grew by 1.92 percent in the fourth quarter of 2017 from 1.4 percent and 0.7 percent in the third and second quarters respectively.
Reading the committee’s communique to journalists in Abuja, MPC chairman and Central Bank Governor, Mr. Godwin Emefiele said “forecasts of key macroeconomic indicators give a positive outlook for the Nigerian economy in 2018.”
He said the committee admonished the Federal Government to redeem contractors’ obligations estimated at N2.7 trillion to enable contractors liquidate their loans with the Deposit Money Banks(DMBs) to address rising Non- Performing Loans (NPLs).
According to him, the MPC members took significant note of progress recorded by the economy spurred by the implementation of the government’s Economic Recovery and Growth Plan (EGRP). He said quick passage of the 2018 budget by the National Assembly would not only accelerate the economy’s recovery pace, but deepen investors’ confidence.
“Forecasts of key macroeconomic indicators give a positive outlook for the Nigerian economy in 2018. This is predicated on the quick passage and effective implementation of the 2018 budget, improved security, foreign exchange market stability as well as favourable crude oil prices,” he said.
“On the downside, the Committee noted the potential impact of the 2019 election related spending, against the weak backdrop of tax revenue efforts, herdsmen related violence and rising yields in the advanced economies”, said Emefiele.
He said the Committee noted with satisfaction the gradual return to macroeconomic stability as reflected in the third consecutive quarterly growth in real GDP in the fourth quarter of 2017, adding that the Apex Bank would soon come up with a mechanism to aid credit flow to critical needy sectors.
Emefiele said MPC members advised the Federal Government to de-emphasize domestic borrowing in order to free credit lines for private sector to borrow, just as the body expressed concern over election expenses with the 2019 general elections only months away.
On measures to arrest rising NPLs, Emefiele said: “We have been very clear about this, and the size of contractors’ debt is N2.7trillion and because these debts are unpaid to the contractors, the contractors themselves are unable to service or pay back their loans at the banks, and that is why we seized the opportunity of this (MPC) communiqué to talk about it so that these debts can be paid.
The Central Bank itself stands ready to accord some form of liquidity status to some of these debts and through that mechanism, we believe the NPL will recede and then the banks can now continue to play their role which is to catalyze growth and support credit delivery to the Nigerian economy.”
The the nine members of the MPC also unanimously voted to retain the Monetary Policy Rate (MPR) at 14 percent and the Cash Reserves Ratio (CRR) at 22.5 percent.