FG urged to jump-start economy to avert CBN’s recession prediction

Central Bank Of Nigeria building

Central Bank Of Nigeria building

Some financial analysts on Wednesday urged the Federal Government to come up with concrete development plans that would assist the nation to jump start the economy.

They made the suggestions amid the warning by Central bank of Nigeria (CBN) that the nation would slip into economic recession in 2016.

They told the News Agency of Nigeria (NAN) in Lagos that there was the need to put plans in place to avert the forecast.

The Executive Secretary, Financial Markets Dealers Association, Mr Wale Abe, said that any concrete step(s) to be undertaken by government had to be implemented within six months.

Abe said the economy had not witnessed any development as result of the downward trend in oil prices at the global market.

He restated that low oil prices had also been responsible for low positive growth.

Abe said the low growth had affected the real sector, the engine of growth of the economy.

Abe, an economist, added that the CBN’s monetary policies were just to ensure financial stability.

Another economist, Dr Ayo Teriba, corroborated the CBN’s pronouncement and urged the Federal Government to heed to the advice.

According to him, it is a statement of fact which needed to be addressed on time.

Mr Muda Yusuf, Director-General, Lagos Chambers of Commerce and Industry (LCCI), also said there was uncertainty in the economic environment.

Yusuf said that the current foreign exchange policy was another factor that had caused confidence crisis which had made investors to move their funds from the economy.

According to him, there is an improvement in power supply but there are still infrastructure challenges in the business environment.

But, Mr Bismark Rewane, Chief Executive Officer, Financial Derivative Company disagreed, saying he was optimistic the economy would pick up in the fourth quarter.

Rewane said there were indications that the oil price at the international market would move up in the fourth quarter.

He, however, admitted that problems associated with the fiscal aspects of the economy needed to be addressed urgently.

Rewane alleged that leakages in the oil subsidy have had negative impact on the nation’s budgeting.

The Monetary Policy Committee (MPC) on Tuesday, Sept. 21 reduced the Cash Reserve Requirements (CRR) of Deposit Money Banks (DMBs) from 31 per cent to 25 per cent.

The decision followed the implementation of the Treasury Single Account (TSA) policy, leading to huge cash withdrawal from the banks to the CBN’s vaults.

This means that some 14 per cent of the CRR is freed from the banks for further investments into the economy.

The reserve requirement or CRR is the minimum amount of money that banks must hold in reserve at the CBN, usually given as a percentage of customer deposits.

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