Recession: Worst is over- CBN governor Godwin Emefiele says
Governor
of the Central Bank of Nigeria, Godwin Emefiele, over the weekend gave cheery
news on the state of the Nigerian economy. According to Emefiele, the worst
days of Nigeria's current economic recession are over. The Nation reports that
Emefiele in a chat with journalists this weekend, said based on these facts,
the worst in Nigeria's economic recession is over.
1.
Foreign portfolio
investors have injected $1 billion into the economy in the last two and half
months
2.
An Emergency Spending
Bill, which will enable the government shorten the process of spending money
(through award of contracts) is ready for the National Assembly
3.Close to N374 billion will be injected into the economy this week to stimulate it. So far, N420 billion has been spent
4. Social spending will soon begin and there will be capital expenditure payments
5. One million traders will get subsidised loans.
Emefiele also spoke on the success of the foreign exchange policy of the government
“The only way we can
improve supply at this time is to say, ‘fine, those foreign investors, those
foreign portfolio investors, what do we do to make them come again?’ And so we
went into a flexible exchange rate regime. We opened the market, we organised
the market. We’ve seen some depreciation in the currency, but I must say that
at this time, we are somewhat happy that the result is paying off, because in
two and a half months, we’ve seen close to about $1billion coming in as inflow
into the market, and the reason this has happened is because other than just
liberalising the market, we bought into the market the OTC (Over-The –Counter)
features market. The Market that provides the opportunity to reduce the
volatility in the foreign exchange market so that people do not bunch up their
supply on the spot, so they can now go i and do their business without
disturbing themselves about the exchange rate. Those were the actions that
we’ve taken and today I must say that it’s been successful.”
Speaking
further, Emefiele said:
“Naturally, let me
say this, if you are in a recession, basically what you do is to spend your way
out of recession. I will tell us what has happened between January and now. I
will tell you what actions have been taken to send us out of this situation.
Budget, like you know was approved in May 2016 and, of course, by that time, we
had started to see signs that this was going to happen. Unfortunately, the
procurement process is such a long one in the Public Service and, of course you
dare not breach, or break the rules of procurement and I give you an example.
When you start the procurement for an item, what happens is that you have to
advertise for bids in the newspapers. That process of advertisement and calling
for bids require that it has to be for 12 weeks. Twelve weeks is three months.
Now when you open the bid, you’ll now see the numbers, you’ll now
negotiate for the prices. After that you’ll go to the Bureau for Public
Procurement, get the approval. After that, maybe you’ll go to the Federal
Executive Council to get approval. You’ll find out that almost six months would
have elapsed and that is why government is saying we must shunt this process.
Shunting this process means that we need to have an Emergency Spending Bill,
which has now been prepared. I am aware it’s ready for the National Assembly to
take on for approval. What that does is, it removes all the bottlenecks
involved in the process of procurement so that government can go directly and
procure items and spend money to stimulate the economy.”
He said
the Federal Government will do everything to revamp the economy despite the
declining revenue from our main source which is the oil sector.
”Government remains
undaunted, the Monetary and Fiscal policies remain undaunted and we also had in
the budget a deficit of N1.8trillion; N900 billion was to be sourced locally,
another N900 billion was to be sourced in foreign currency, and because the foreign
currency is yet to come in, what the Monetary and Fiscal authorities are saying
is, ‘if the need arises, it would provide what is called ‘Bridge Funding’ for
the fiscal authorities so they can go ahead and spend. When the proceeds of the
foreign loans come, then, we can use that to clear the bridge fund that has
been done. That is allowed because this time we do not need to wait and that’s
why you may have read that the Minister of Finance just came up and said
so far we have spent about N420 billion and, in fact, by this coming week (this
week) alone another close to N374 billion would be injected into the economy to
stimulate it. The social spending will kick in; other payments for capital
expenditure will also kick in. Those are the things that government is doing
and I must confess to you that I’m optimistic that we have turned the bend and
going forward we will still spend more that will stimulate the economy,” he
said.
Emefiele
added that part of the plan that has been projected for 2016 is that one
million market women will benefit from subsidized loans at subsidized rates
that will come from “our micro, small and medium enterprise loan.
” The CBN is discussing
with the fiscal authorities and the Office of the Vice President that handles
social spending is also in discussion with the apex bank to see to it that “we
put it in place as quickly as possible so that market women across the
country can enjoy the micro, small and medium enterprise loan at subsidised
prices, the CBN chief added.
''Those are some of the actions we are taking
and I’m optimistic that going forward you are going to see more action that
will help to stimulate the economy and turn the country around again,” Emefiele
said.
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