The news of Nigeria exiting recession was well received by many. But the Monetary Policy Committee, MPC, of the Central Bank of Nigeria, CAN, insists that the 0.55 per cent Gross Domestic Product, GAP, growth rate, which took the economy out of recession, was still fragile.
Godwin Emefiele, CBN governor, said after the committee’s meeting Tuesday, that although the recovery was weak, the committee was hopeful that the active implementation of the 2017 budget could boost aggregate demand and employment.
Emefiele said the Monetary Policy Rate was retained at 14 per cent, while the Cash Reserve Ratio was also retained at 22.5 per cent and Liquidity Ratio at 30 per cent. The committee has retained the rates since July 2016. The Asymmetric corridor was retained at +200 and -500 basis points around the MPR.
According to Emefiele, the committee decided not to tinker with the monetary policy rates in order to boost aggregate demand and stimulate growth.
He explained that six out of the seven members of the MPC voted for the retention of all rates, while one voted for the easing of the lending rate.
Emefiele justified the retention of the rate, saying that the committee believed that the effect of fiscal policy action towards stimulating the economy had begun to manifest as evident in the exit of the economy from the 15-month recession.
“The committee applauded the exit of the Nigerian economy from recession but observed that the growth remains fragile and, therefore, hopes that complementary fiscal and monetary policies will sustain the growth momentum. Although, it seems fragile, the fragility of the growth makes it imperative to allow more time to make appropriate complementary policy decision to strengthening the recovery. Secondly, the committee was of the view that economic activities would become clearer between now and the first quarter of 2018 when growth is expected to have sufficiently strengthened,” said Emefiele.
He added that, “The most compelling argument for a hold was to achieve more clarity in the evolution of key macro economy indicators, including budget implementation, economic recovery, exchange rate, inflation and employment generation.”

Emefiele dispelled speculations that the CBN had over-funded the activities of government. “Let me state categorically that the CBN has not over-funded the Federal Government. The Federal Government, on its own, decided that all its funds, both in local and foreign currencies, should be moved to the Central Bank of Nigeria, into the Treasury Single Account. If you approach your bank to allow you to over-withdraw from your account temporarily, your bank will. So this have nothing to do with the CBN or any other bank. The assurance I will give to you is this: There is no truth in the issue of overfunding, because whatever is overdrawn is far less than what the Federal Government also has in its TSA,” explained Emefiele.