• CBN MPC members vote to keep Nigeria’s interest rate at 13.5% to help tame uptick in inflationary pressures and support price stability.
  • The monetary authority urges President Buhari's led government to reconsider oil price benchmark in 2020 budget.
  • They call for reforms in revenue generating and security agencies in the country.

The monetary policy committee of the Central Bank of Nigeria (CBN) held its last rate-setting meeting for 2019 with few cautionary notes for the government.

In a communique issued at the end of the two-day meeting in Abuja, the members of the Committee decided by a unanimous vote to retain the Monetary Policy Rate (MPR) at 13.5% and to hold all other policy parameters constant.

The Committee believed that maintaining the current policy stance will help tame uptick in inflationary pressures and support price stability.

Godwin Emefiele, CBN governor, speaking at the end of the 270th meeting of the Monetary Policy Committee (MPC) at the apex bank’s headquarters in Abuja. (Twitter/Channels Television)
Godwin Emefiele, CBN governor, speaking at the end of the 270th meeting of the Monetary Policy Committee (MPC) at the apex bank’s headquarters in Abuja. (Twitter/Channels Television)
Twitter/Channels Television

Here are five issues the committee asked the federal government to work on:

1. Institutional reforms in revenue-generating and security agencies

The monetary authority advised the federal government to institutionalise reforms through policies that would automate day to day processes of key revenue generating and security agencies such as the Nigerian Customs. Members of the committee noted that these will help the government to build more fiscal buffers and ensure increased efficiency in public expenditure.

2. Reconsideration oil price benchmark in 2020 budget

Members of the monetary authority advised the government to reconsider its 2020 budget oil price benchmark of $57 per barrel. The committee believed this will help the government to build fiscal buffers as market forecasts remain relatively weak for global oil prices.

Though the global oil price is currently trading higher than the benchmark, the price fell on Tuesday. Brent crude futures which Nigeria trade on were down 5 cents at $63.60 after rising 0.4% in the previous session.

President Muhammadu Buhari and the CBN Governor, Mr. Godwin Emefiele
President Muhammadu Buhari and the CBN Governor, Mr. Godwin Emefiele

3. Improve investment climate and Ease of Doing Business to attract FDI

As Nigeria signed the African Continental Free Trade Agreement (AfCTA), the monetary members urged the government to improve the investment climate and ease of doing business. They said the government must also improve working conditions for global auto manufacturers, including for aviation and rail industries to invest in the country.

4. Support the monetary policies with strong visibility of fiscal and structural policies

The monetary authority asked the federal government to urge the Pension Commission to look away from the traditional choice of government securities to viable long-term investments in real estate, manufacturing, and agriculture.

They also called for a solid fiscal and structural policy support to place the economy on a sustainable and self-sufficient path of output growth.

The Governor, Central Bank of Nigeria, Mr Godwin Emefiele, with the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, at the news briefing on Nigeria’s participation in the just-concluded World Bank/IMF Annual Meetings in Washington, United States on Sunday, Oct. 20, 2019. (NAN)
The Governor, Central Bank of Nigeria, Mr Godwin Emefiele, with the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, at the news briefing on Nigeria’s participation in the just-concluded World Bank/IMF Annual Meetings in Washington, United States on Sunday, Oct. 20, 2019. (NAN)

5. Alignment between fiscal and monetary authorities

The committee called for policy alignment between the monetary and fiscal authorities, to douse the adverse effects on the domestic economy in the medium term, through the reduction of importation of food and other commodities.