.Urges more prudent fiscal measures to reduce poverty
By Clara Nwachukwu, Washington DC
The Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, has expressed delight over the International Monetary Fund’s (IMF) support for recent tightening of monetary policies, despite criticisms from the home front.
Emefiele, who spoke with journalists on the sidelines of the IMF/World Bank Spring Meetings in Washington DC, on Friday, believes this is an indication that Nigeria’s monetary policy managers must be doing something right, and will continue on that path.
He said: “We are delighted that even in Sub-Saharan Africa, the growth levels in Nigeria, even though by our assessment is still sub-optimal, that the IMF would among all the countries in Africa, say that growth in Nigeria should be retained at 3.2% gladdens our heart.
“It means we are doing certain things that are correct, and we’ll continue to do those things that are right. But it also means that we are not going to remove our eyes on monetary policy, which is to focus extensively on how to moderate inflation.”
While keeping an eye on monetary system stability, especially to push down inflation, the Governor also assured that the CBN will not lose sight of Nigeria’s financial institutions, to “ensure that banking system stability remains resilient and then strong as it is right now.”
“So, the focus remains that monetary policy and monetary authorities must continue to focus on inflation so as to continue to bring it down. While monetary authorities are doing their work, to bring down inflation, they must also keep their eyes on banking systems’ stability, through monitoring, supervision, and regulatory frameworks and the rest of them,” he added.
This stance is not unconnected with the recent collapse of the Silicon Valley Bank and Signature Bank in the United States, which has heightened fears of imminent global banking crisis.
And the high point of all the consequences of what we’ve seen in 2022 is that poverty, which was very well discussed here, has risen quite astronomically globally and over 700 million people are being struck by poverty.
Rising poverty, food crisis
Commenting on the general overview of the Spring Meetings which ended yesterday, Emefiele noted that the focus of gathering policymakers from across the globe was to proffer solutions on how to address the rising poverty and food crisis occasioned by high global inflation.
He said: “The forecast at the meeting remains that yes, a lot of work has been done in 2022, and growth is gradually returning again, but it is still at the sub-optimal level.
“Inflationary pressures continue and even though inflation is coming down as a result of measures being taken by monetary authorities to bring down the inflation rate, it still remains at very high levels globally to the extent that even as global inflation is projected at seven per cent, it remains very high.
“And the high point of all the consequences of what we’ve seen in 2022 is that poverty, which was very well discussed here, has risen quite astronomically globally and over 700 million people are being struck by poverty.
“Food insecurity has also risen quite tremendously to the extent that over 350 million people globally are hit by extreme food crises all over the world.”
High debt levels
Regarding the rise in global debt level, which have caused a funding squeeze, Emefiele noted that multilateral organisations were more constrained to lend to countries in need of loans.
He said: “Even the IMF themselves also talked about the fact that even the debt portfolios and lending portfolios have reached all-time highs.
“In two decades, this is the highest level of debt portfolio that the IMF has seen in its books, and unfortunately warning that they may not be in a position to do much for countries that really require more loans, to be able to restructure the balance sheet and then and then keep going on.
“For the fiscal of course, because of the limited fiscal space, the IMF insists that countries need to reduce their spending, but, in my case, I will say well, if you want to spend, then raise revenue to be able to spend.
“I think it’s important that you must raise revenue and not get yourself constrained in an environment where there is no debt, where financial market conditions are very tight and very limited, and where interest rates are high and could create a lot of burden for economies.
“And the only option for fiscal in this case is to expand the revenue base so as to be able to spend.”
