No rate cut while inflation remains above 12 percent
The CBN governor, after announcing the decision to retain the country’s benchmark interest rate at 14 percent, hinted that the apex bank had no plans to ease benchmark interest rates until inflation rate decelerates to 12 percent.
This would mean a 400 basis point decrease from the latest figure of 16.1% which was recorded in June and will is in line with the Abuja-based bank’s projection for the full-year.
The governor said the MPC had worked with a model which showed that cutting interest rate while inflation remained above 12 percent would have little or no impact on stimulating the economy.
Nigeria’s fiscal deficit hits N2.5 trillion in H1 2017
The federal government’s fiscal deficit hit a whooping N2.5 trillion in the first half of the year, the CBN governor Emefiele said.
That is 13 percent above the budget benchmark of N2.2 trillion for the full-year.
At this rate, the fiscal deficit could double the budget estimate and come to N4 trillion by year-end.
Mind-boggling, given the boiling pressure on public revenues and the impact of high government borrowing costs on private sector lending.
9 mobile to get new owners within 4 months
The CBN governor disclosed that Etisalat Nigeria, now 9 mobile, will be sold off to new investors within 90 to 120 days.
Advisers to manage the sale have been selected and there has been considerable interest from investors to snap up the telco, which serves some 20 million subscribers, Emefiele said.
This follows a $1.2 billion debt crisis which saw major investors, Etisalat Group and Mudabala pull out and led to a temporal take over by a consortium of 13 creditor banks.
“Advisers have been appointed to midwife the sale process and within the next 90 to 120 days, a deal would have been struck to sell the company.”
Emefiele also disclosed that Etisalat recorded N16 billion in revenues in June, contrary to assumptions that the telco’s revenues would have suffered a hit following the unpleasant turn of events.
CBN reiterates commitment to market determined fx rates
Emefiele excited investors when he said the “Gone are the days where the CBN intervenes in the FX market to defend the naira.”
“We have left issues concerning fx rates for the market to determine,” Emefiele said.
He however stated that the CBN remains a fringe player in the market.
The naira was quoted at N367 per US dollar Tuesday, at the newly introduced Investors and Exporters window, where the CBN says the exchange rate is market determined.
Food prices bear brunt of herdsmen attacks
Herdsmen attacks in the Northern part of Nigeria are to blame for the surge in food prices over the past few months, Emefiele said.
The food index has defied the pattern of slowing headline inflation in the past five months.
Food prices increased 19.91 percent year-on-year in June 2017 compared to a 19.27 percent in the preceding month.
It was the highest food inflation since February of 2009 as the cost of meat, bread and cereals, fish, potatoes, yam and other tubers, oils and fats, milk, cheese, eggs, coffee, tea and cocoa, surged.
Warnings of fragile economic recovery
The CBN also warned of a fragile economic recovery if the fiscal authorities falter in fully implementing the N7.4 trillion-worth 2017 budget.