CBN targets $50bn external reserve by year end
The Central Bank of Nigeria (CBN) has said it is targeting to grow the external reserve to $50 billion before the end of 2018.
CBN Governor, Mr. Godwin Emefiele, gave the projection at the 25th edition of Seminar for Finance Correspondents and Business Editors holding in Uyo, Akwa Ibom State.
Emefiele who was represented by the Deputy Governor, Corporate Services, Mr. Edward Adamu, said, “FX Reserves will continue to grow. Following recent accretion, FX Reserves may be about $50bn sometime later this year.
“FX Reserves has recovered significantly from a low of just over $23bn in October, 2016, to about $47.37bn as of April 5, 2018,” he noted.
The theme of the seminar is: “Sustaining Economic Growth Beyond Recession” which he said is both relevant and timely considering the fact that we have just exited Nigeria’s first recession in over 25 years.
The CBN governor noted that, “The economic recovery will consolidate. As the sentiments improve in the macro-economy and supported by proactive monetary, trade, industrial and fiscal policies, we expect a continued uptick in GDP growth with a positive spillover to improved unemployment rate.”
As policies to strengthen the agricultural and industrial sectors become more emergent, growth in these sectors will rise, further bolstering overall economy, he explained.
While assuring that exchange rate stability would continue, the CBN gov. said, “As we entrench and sustain the transparency in the FX market, as FX reserves accretion continues, and market confidence and improved sentiments remain, we expect that the exchange rate will not only be stable, but would begin to appreciate against major currencies.
“The adverse competitiveness outcome which such appreciation may entail would be adequately mitigated by proactive policies to ensure that our balance of payments position is not undermined,” he reassured.
Mr. Emefiele also noted that the CBN expected a redoubling of strong policy coordination, collaboration and cooperation which flourished during the very difficult times.
“To sustain our recovery, the need is greater now than ever for a robust policy coordination between the key aspects of economic policy making space. This would include fiscal, monetary, exchange and trade policies which must be targeted at protecting farmers to boost agricultural outputs, support local companies and enhance manufacturing and industrial capacities with a view to diversifying the economy away from oil and fossil fuels,” he said.
The CBN governor also said the inflation rate at 14.3 per cent was still unhealthy to drop lending rates below the current 14 per cent as a drop in interest rate would impact negatively on inflation which might lead to another recession.
He, however, noted that the CBN was poised to introduce policies that would drop down interest rates to single digit before year end.
On the basis of the CBN policies (MPC, interventions, etc.), he noted that, “Barring any unforeseen shock, we expect that inflationary pressure will continue to ease. This may return to very low double digit or high single digit levels during the year.”