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Emefiele Seeks Structures to Insulate Economy from Oil Shocks - THISDAY

FEBRUARY 17, 2020

Says CBN will continue to push private sector credit

Obinna Chima

 

The Central Bank of Nigeria (CBN) Governor, Mr. Godwin Emefiele, has stressed the need to urgently diversify the economy and “create institutional structures that will insulate the economy from oil shocks.”

Emefiele also warned that a potential fall in oil prices could debilitate the economy and adversely impact exchange rate and heighten inflationary pressure.

The CBN governor said this in his personal comment at the January Monetary Policy Committee (MPC) meeting, obtained at the weekend.

The benchmark Brent crude price stood at $56.78 per barrel as at Saturday, $3.22 below the $60 oil benchmark for the 2020 budget.

 

“I reiterate that even as economic recovery stayed fragile, effective anchoring of inflation expectations remain fundamental.

“Besides, potential fall in oil prices could debilitate the economy and adversely impact the exchange rate with ramifications for inflation.

“It remains urgently imperative to diversify the economy and create institutional structures that will insulate the economy from oil shocks,” he explained.

According to him, following a tepid performance in 2019, global macroeconomic condition is expected to stabilise in 2020, as growth momentum inches up, albeit, sluggishly. According to the International Monetary Fund (IMF), global growth for 2020 is projected at 3.3 per cent, from 2.9 per cent in 2019.

 

The projection was buoyed by expected positive outcome of the US-China trade talks, favourable execution of Brexit, and ample monetary policy stimulus. Regardless, downside risks subsist and market sentiments remain fragile, especially as heightening geopolitical tensions between US and Iran amplified global uncertainties.

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