Emefiele: Economic Recession is ‘Imminent’
Nigeria’s economy will probably slip into a recession after a four-month delay in the nation’s budget stalled economic stimulus programs, CBN Governor Godwin Emefiele said today. This follows contraction in GDP growth figures from National Bureau of Statistics.
“One aspect that is largely contributing to the situation we find ourselves today is the delay in the passage of the budget,” Emefiele said. “You can imagine a situation where a budget is passed in May when it should have been passed in January, or even latest February.”
A “recession, which we signaled in July 2015, now appears imminent,” Emefiele told reporters in Abuja today. “Even after the delayed budgetary passage in May 2016, the initial monetary injection approved by the federal government may not impact the economy soon.”
CBN left its benchmark interest rate at 12 percent. While inflation accelerated to an almost six-year high of 13.7 percent in April, Nigeria’s economy contracted in the three months through March for the first time in more than a decade as oil output slumped. And continuing oil facility vandalism in the Niger Delta.
“The CBN has chosen to focus more on growth rather than price stability,” Analysts suggested. “To avoid the economy going into recession it felt it has to hold the monetary policy rate. This is not unconnected to subsidy removal by NNPC GMD Ibe Kachikwu two weeks ago, and also decision by CBN to stop funding Crude purchase by Oil Marketers through it accounts.” The Nigeria Labour Congress staged a largely unsuccessful strike to curb the removal, but was not observed by large number of workers across the country.
President Muhammadu Buhari signed the 2016 budget, which was due in January, into law only in May, causing delays in plans to boost the economy and borrow to bridge the nation’s fiscal shortfall. Emefiele, who on Tuesday announced plans to introduce more flexibility in the foreign-exchange market, something which President Buhari has been resisting in order to secure the naira, said the budget delay has caused systemic distortions.