CBN urges FG to consider PPP model in infrastructure development

…Retains MPR, CRR, LR

By Kayode Ogunwale

 

TO overcome current challenges facing Nigeria economy, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has urged Federal Government to consider using of Public Private Partnership (PPP) model in its infrastructure development programme.

The committee considered this in its summary of considerations at the end of its meeting in Abuja.

Speaking at the post-MPC meeting briefing, the CBN governor, Godwin Emefiele said the committee urged the authorities to seriously consider using the Public Private Partnership (PPP) model in its infrastructure development programme as a means of cushioning any possible shocks to budgeted revenue.

He said, the committee re-assessed the headwinds which confronted the economy in 2016 and the opportunities for recovery in 2017.

According to him, “In particular, the MPC 21 evaluated the implications of the rising wave of nationalistic ideologues across the West, the re-evaluation of trade agreements and the possibility of rapid monetary policy normalization in the United States, with adverse consequences for other countries, including Nigeria. The uncertainties underpinning the implementation of Brexit and the apparent retreat from globalisation and free trade were also important points of reflection.”

From a financial stability standpoint, the committee noted the possible impact of the inclement macroeconomic environment on banking sector resilience.

The MPC however urged the management of the bank to engage industry operators to discuss likely issues of asset quality, credit concentration and high foreign exchange exposures.

Given the growth in money supply arising from unconventional monetary policy operations of the bank and implications for price and exchange rate developments, the committee is committed to moderating growth in narrow money in the 2017 fiscal year in line with the bank’s monetary growth benchmarks, Emefiele said.

In recognition of the seemingly inevitable structural shift in the global economy, the committee reiterated the need to be more inward looking and hasten efforts towards economic diversification to support the domestic economy and improve life for the Nigerian people.

Speaking on the headwinds in the economy and the uncertainties in the global environment, Emefiele noted that the committee reasoned that most of its decisions in 2016 were informed by the need to address the delicate balance between price stability and growth.

The CBN boss said, the decided by unanimous vote to retain the Monetary Policy Rates at 14 per cent; the Cash Reserve Ratio at 22.5 per cent; Liquidity Ratio at 30 per cent; and retained the Asymmetric corridor at +200 and -500 basis points around the MPR.

Furthermore, the MPC concerned that the current situation was not amenable to simplistic analyses and quick fixes such as have found expression and increased attention at different fora and the media.

“The domestic economic challenges which include a chronically import dependent consumption culture, lack of competitiveness of many sectors of the economy and yawning infrastructural gap, have combined with an unfavorable external environment to complicate the macroeconomic policy environment”, he said.