AGAINST strident criticisms for its poor handling of the national economy, the federal government got a reprieve at the weekend. Sanusi Lamido Sanusi, governor of the Central Bank of Nigeria, CBN, commended it for being fiscally prudent in its expenditure in 2013.
Sanusi, who spoke on Bloomberg TV in Abuja, noted that the federal government’s overall spending in 2013 has not been significantly higher than it was in 2012 due to tight controls in spending in the second half of this year. This situation has aided in moderating the rate of inflation in the country, bringing it down to a five-year low, according to the CBN governor. With this trend, Sanusi hopes that the stability anchored in key macroeconomic indicators like inflation, exchange and interest rates, will be sustained.
He, however, advised caution in future spending owing to the decline in oil revenue despite the relative stability in oil price and output when compared with preceding years.
While expressing concern over the challenge of loss of revenue from oil exports, Sanusi advised financial authorities to block fiscal leakages in the oil sector and increase oil revenues.
In anticipation of public spending ahead of the 2015 general elections in the country, Sanusi said that politicians the world over tend to spend money in election years, and so he did not rule out the possibility of a supplementary budget. Although the 2014 budget as proposed to the National Assembly is prudent, a supplementary budget would portend a risk to hard-earned stability.
Sanusi, however, assured that the CBN is ready to use its monetary policy tools to respond appropriately and ensure that the Naira remains stable, even as inflation is kept under control. It will be recalled that the Monetary Policy Committee, MPC, of the CBN at its last meeting, voted to keep the MPR at 12 percent plus or minus two percent; private sector CRR at 12 percent; public sector CRR at 50 percent and Liquidity Ratio at 30 percent.
— Dec. 9, 2013 @ 01:00 GMT