The Monetary Policy Committee of the Central Bank of Nigeria on Tuesday warned that the economy might relapse into protracted recession if bold monetary and fiscal policies were not activated immediately to sustain the programmes of the Federal Government.
The committee stated that available forecasts of key macroeconomic indicators pointed to a fragile economic recovery in the second quarter of the year.
Data from the National Bureau of Statistics showed that the contraction in the economy moderated to 0.52 per cent in the first quarter.
The MPC identified the downside risks to economic outlook to include weak financial intermediation, poorly targeted fiscal stimulus and absence of structural programme implementation.
The CBN Governor, Mr. Godwin Emefiele, while reading the communique after the end of the committee’s two-day meeting, called for more fiscal measures to stimulate the economy.
He said there was a need for improvements in economy-wide non-oil exports, especially agriculture, manufacturing, services and light industries.
He also said the expected fiscal stimulus, non-oil federal receipts and other measures that were expected to drive the growth impetus for the rest of the year must be pursued relentlessly.
Emefiele stated, “Available forecasts of key macroeconomic indicators point to a fragile economic recovery in the second quarter of the year. The committee cautioned that this recovery could relapse into a more protracted recession if strong and bold monetary and fiscal policies are not activated immediately to sustain it.
“Thus, the expected fiscal stimulus and non-oil federal receipts, as well as improvements in economy-wide non-oil exports, especially agriculture, manufacturing, services and light industries, all expected to drive the growth impetus for the rest of the year, must be pursued relentlessly.”
He added, “The committee expects that timely implementation of the 2017 budget, improved management of foreign exchange, as well as security gains across the country, especially in the Niger Delta and north-eastern axis, should be firmly anchored to enhance confidence and sustainability of economic recovery.
“The committee identified the downside risks to this outlook to include weak financial intermediation, poorly targeted fiscal stimulus and absence of structural programme implementation.”
Emefiele also said the committee expressed concern over the N2.51tn fiscal deficit of the Federal Government in the first half of this year, adding that it was stifling the growth of the private sector.
He welcomed the move by the fiscal authorities to engage the services of asset tracing experts to investigate the tax payment status of 150 firms and individuals in an effort to close some of the loopholes in tax collection and improve government revenue.
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