We Must Discontinue Dependence On Crude Oil For Public Revenue 818X490 2 High Recurrent Expenditure Raises Debt Servicing Challenges, Says Cbn

High recurrent expenditure raises debt servicing challenges, says CBN

•Retains lending rate at 11.5%

Nike Popoola

The Monetary Policy Committee of the Central Bank of Nigeria on Tuesday retained the Monetary Policy Rate at 11.5 per cent.

The CBN Governor, Godwin Emefiele, disclosed this after the committee’s two-day meeting in Abuja.

It also retained the Cash Reserve Ratio and Liquidity Ratio at 27.5 per cent and 30 per cent respectively.

The committee retained the asymmetric corridor of +100/-700 basis points around the MPR.

At the meeting, the committee also expressed concerns of eminent challenges of servicing the country’s mounting debt liabilities.

Ten members of the committee were in attendance.

“The committee expressed concern over the rising public debt stock, as recurrent expenditure remained relatively high, compared with capital expenditure, thus, signalling future debt servicing challenges,” Emefiele said.

Members of the committee reiterated the adverse impact of insecurity on food production, stressing that the current uptick in inflationary pressure could not be solely associated with monetary factors, but due mainly to legacy structural factors across the economy, including major supply bottlenecks across the country.

The committee called on the government to redouble efforts at strengthening infrastructural efficiency and address the emerging security challenges in the country.

In addition to this, the committee called on the government to explore the option of effective partnership with the private sector to improve funding sources necessary to address the huge infrastructural financing deficit.

To improve government revenue sources and investment in capital, the committee called on the government to take advantage of the take-off of the African Continental Free Trade Area, which could boost domestic production and generate sizeable revenues for government, as well as improve domestic productivity and competitiveness.

The committee noted that the COVID-19 pandemic and the necessary measures put in place by the government to forestall its public health impact, such as the lockdown and other associated restrictions, contributed to the Nigerian economy going into recession, much like almost every other country in the world.

Members agreed that the committee’s current priority remained to quicken the pace of the recovery through sustained and targeted spending by the fiscal authority supported by the bank’s interventions.

A professor of capital market at the Nasarawa State University Keffi, Uche Uwaleke, said as usual, the choices before the MPC was whether to reduce, increase or hold the rates.


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