The Central Bank of Nigeria (CBN) yesterday said it may be compelled to review interest rate upwards in response to rising inflation.
Governor of the apex bank, Godwin Emefiele, said much as Nigerians desire to access finance at lower rates, the country’s monetary policy rate (MPR) would have to appreciate in view of the rise in inflation in the last two months.
“Truly, Nigerians really expect that if they want to access finance, they should do so under a low interest regime.
“But of course you will agree with me that with the increase in inflation rate, from about 11.38 per cent it was in February to almost about 12.8 in March, naturally what you find is that interest rate would have to still go up sort off.
“When you have the MPR below inflation rate, it is not a model that is acceptable.”
Emefiele who spoke on Saturday at the International Monetary Fund headquarters in Washington, United States, however assured Nigerians that the CBN under his leadership will continue to do all it can to ensure that the sectors of the economy that grow the domestic industry, get needed interventions.
He said, “at the level of the CBN, we would continue, as much as possible to see how we can continue to increase our interventions to certain targeted areas of the economy. Particularly agriculture, mining, the real sector, areas that would boost domestic production, areas that would help to support our push away from relying on oil.
“Where we are seeing goods that can be produced in the country, where we find investors that are investing in domestic production rather than following up on exports, then we would continue to give those kind of investors support.”
The CBN in November 2015, the CBN reduced interest rates from 13 to 11 per cent, the first time in six years, to free up some money for economic growth. Last month, the rate was raised to 12 per cent and now has been moved to 13 percent.
Also in Washington yesterday, minister of finance, Kemi Adeosun, reiterated Nigeria’s position that the country would not accept a loan facility from the International Monetary Fund (IMF).
She said that rather, the country would look inwards to address its economic challenges.
Managing director of IMF, Christine Largarde, had advised Nigeria to seek help on its economy, saying the organisation was willing to assist.
Speaking on the World Bank/IMF special edition of BBC’s HardTalk anchored by Stephen Sackur, Lagarde remarked that Nigeria has huge potential, especially in her youth and that the IMF was ready to help Nigeria, appealing to President Muhammadu Buhari to take steps to move in the direction of “flexible exchange rate”.
Adeosun, in a statement signed by her media aide, Festus Akanbi, said the government was already applying a “cocktail of measures” to address the problems confronting the country at the moment.
“Nigeria is not sick. The real vulnerability in the Nigerian economy is over-dependence on a single source of revenue; oil,” she said.
She said Nigeria had resolved to build resilience into the country’s economy to hedge against future oil shocks because dependence on oil brings about vulnerability and laziness.
“So, we are doing a combination of things to diversify our economy, with revenue mobilisation to enable sufficient investment in developing the non-oil sectors. We have great opportunities to reset the Nigerian economy and ensure that as we go forward, growth will be in a sustainable manner so that we won’t be vulnerable to oil price fluctuations.”
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