The Senate held a closed-door Ministerial Briefing, which was attended by the Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele.
The purpose of the engagement was to gauge the effectiveness of the monetary and fiscal policies that have been adopted to salvage the current economic situation in the country.
At the briefing, Senators questioned the CBN Governor on:
1. The recent changes made to Nigeria’s foreign exchange management policy;
2. The determination of foreign exchange rates;
3. The monetary policy of the Federal Government;
4. The challenges being experienced by many commercial banks; and,
5. The need to diversify and grow Nigeria’s economy for better performance.
Moving forward, the 8th Senate will continue collaborative approach of working to bring succour to the Nigerian people in the form of effective oversight and innovative legislation.
IMF WARNS NIGERIA HEADING TOWARDS RECESSION
The International Monetary Fund (IMF) and the Central Bank of Nigeria Governor Godwin Emefiele on Tuesday gave conflicting prognoses of the Nigerian economy, with the fund forecasting that the Nigeria economy was likely to contract by 1.8 per cent this year, warning that it was heading towards recession.
Emefiele, on the other hand, during a closed-door briefing with the Senate, informed the upper legislative chamber that the economy was suffering from stagflation.
A recession is defined as a significant decline in activity across the economy, lasting longer than a few months. It is visible in industrial production, employment, real income and wholesale-retail trade.
The technical indicator of a recession is two consecutive quarters of negative economic growth as measured by a country’s gross domestic product (GDP); although a country’s statistical agency does not necessarily need to see this occur to call a recession.
Economic stagflation refers to a period of little or no growth in an economy (of less than 2 or 3 per cent annually) and relatively high unemployment – economic stagnation – accompanied by rising prices, or inflation, or inflation and a decline in GDP.
Nigeria’s GDP growth contracted to -0.36 per cent in the first quarter of this year (Q1 2016) compared to 2.11 per cent in Q4 of 2015 and 3.86 per cent in Q1 2015. Several economists have already forecast that the economy is likely to contract again in the second quarter of this year.
Also, the country’s Consumer Price Index (CPI), which measures inflation, rose by 0.9 per cent to an 11-year high of 16.5 per cent in June compared to 15.6 per cent in May, the National Bureau of Statistics (NBS) said Monday.
That was the fifth consecutive month that the headline index had risen. The increase in the month under review was attributed to energy prices, imported items and related products, which continued to be persistent drivers of the core sub-index.
The IMF released its forecast on Nigeria in its latest World Economic Outlook (WEO) titled: “Uncertainty in the Aftermath of the UK Referendum,” posted on its website.
The nine-page global report showed that Nigeria’s growth projection for this year was revised downwards, from the 2.3 per cent it had forecast in its April report. It also forecasts a 1.1 per cent growth for Nigeria in 2017, down from the 3.5 per cent it made in April.
“The outlook for other emerging markets and developing economies remains diverse. Growth projections were revised down substantially in sub-Saharan Africa, reflecting challenging macroeconomic conditions in its largest economies, which are adjusting to lower commodity revenues.
“In Nigeria, economic activity is now projected to contract in 2016, as the economy adjusts to foreign currency shortages as a result of lower oil receipts, low power generation, and weak investor confidence.
“These revisions for the largest low-income country are the main reason for the downgrade in growth prospects for the low-income developing countries’ group.
“In South Africa, GDP is projected to remain flat in 2016, with only a modest recovery next year. In the Middle East, oil exporters are benefiting from the recent modest recovery in oil prices while continuing fiscal consolidation in response to structurally lower oil revenues, but many countries in the region are still plagued by strife and conflict,” it explained.
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