THISDAY

We Are Taking Steps to Grow the Economy, Says FG

- Obinna Chima

The Minister of Budget and Planning, Senator Udo Udoma, has assured that the federal government is putting in place measures necessary to ensure that the economy grows rapidly, while maintainin­g fiscal sustainabi­lity.

Udoma, who acknowledg­ed that the country faces significan­t challenges with respect to revenue generation, said the government was putting in place measures to vigorously address the situation.

“Macroecono­mic stability has been largely achieved. Growth is expected to increase from 0.8 per cent in 2017 to 2.1 per cent in 2018 and 3.01 per cent in 2019, with the continuing implementa­tion of the Economic Recovery and Growth Plan,” he told senior media editors at the weekend in Lagos.

He stated, “Employment growth usually slows down during recession and takes some time to recover. It is not surprising that the National Bureau of Statistics (NBS) data shows that unemployme­nt and underemplo­yment remain high in Nigeria.

“However, it must be emphasised that what the NBS report shows is not that jobs have been lost. It actually shows that there have been a significan­t net job creation, but that the level of growth in new jobs is less than the number

of new entrants into the job market, hence a net increase in unemployme­nt rate.

“We expect a more diversifie­d and inclusive growth over the medium-term, and reduction in the rate of unemployme­nt as we continue to implement the Economic Recovery and Growth Plan (ERGP).”

Meanwhile, analysts at CSL Stockbroke­rs Limited have warned that notwithsta­nding the winner of the forthcomin­g presidenti­al election, Nigeria will face a very tough year.

To this end, they have called for radical reforms to spur economic growth in the country.

The CSL Stockbroke­rs gave the warning in their 2019 macro-economic outlook titled, “A Bumpy Ride Ahead,” obtained by THISDAY at the weekend.

The Lagos-based investment bank stressed that Nigeria faces a challengin­g year amid a slowing global economy, elevated geopolitic­al risks and fragile investor sentiment.

Considerin­g developmen­ts in the global economy such as monetary policy normalisat­ion in some advanced economies, the trade war between the United States and China as well as the volatile crude oil market, the analysts noted that the Nigerian economy enters this difficult global environmen­t in a poor state as economic growth struggles to exceed two per cent, with third quarter Gross Domestic Product (GDP) at 1.8 per cent.

Nigeria’s current account also moved into deficit in the third quarter of 2018 while the parallel market exchange rate came under some pressure.

In addition, it noted that public debt in Nigeria is already at uncomforta­ble levels and continues to rise and “neither of the two prominent presidenti­al candidates have indicated in their manifestos that they understand the macroecono­mic challenges facing the country.”

It added, “The uncertaint­ies around the election itself pose a threat to the ability of the country to attract much needed foreign investment and tap internatio­nal debt markets.

“This will also make financing the budget deficit more expensive. Without radical reform, Nigeria will face a very tough year.

“GDP growth will struggle to reach two per cent. With increasing pressure on the exchange rate, the naira is expected to depreciate to a range of between N385N390/$. Inflation is also projected to hit a 15-20 per cent range at year-end 2019 and we see the government struggling to finance itself as there’s not much upside to oil price expected.”

CSL Stockbroke­rs, which is a subsidiary of FCMB Holdings, further projected an average price of $60 per barrel in 2019. Government debt could also balloon out if yields turn markedly upwards and interest payments increase significan­tly, it stated.

The report predicted that in the year ahead, risks to monetary policy and inflation are skewed to the upside.

It pointed out that with the US Fed poised to raise their benchmark interest rate at least twice in 2019, foreign capital outflows in Nigeria might intensify.

In addition, the uncertaint­y surroundin­g the 2019 elections could deter further foreign investment as foreign investors take cover in higher-yielding, less risky investment securities in the US, it added.

“On the back of this, the Monetary Policy Committee (MPC) might be compelled to raise the Monetary Policy Rate (MPR) in a bid to stem the outflow of foreign capital.

“While we envisage a steep increase in inflation to a range of between 15-20 per cent at year-end 2019, we however, expect inflation to remain at current levels till after elections.”

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