Nigeria’s Apex bank held the first meeting of its reconstituted Monetary Policy Committee (MPC) for the year 2018. Following a detailed review of domestic macroeconomic events, the MPC deemed it fit to retain all rates: MPR at 14% (which has remained at a record high of 14 percent since July 2016), CRR 22.5%, Liquidity Ratio 30% and Asymmetric corridor at +200 and -500 basis points around the MPR1. The unchanged monetary policy can be attributed to the MPC’s satisfaction with the continued moderation in economic indices as well as the gradual return to macroeconomic stability. Going forward, fiscal policy authorities should consolidate these positive outcomes given monetary policy inaction.
Macroeconomic Report & Economic Updates
Power sector statistics show a significant increase in power generated from August 12 to August 19, 2016. Precisely, power generated increased by 2.2 percent to 3953.6MW(a 4-month high). Increased water reserves in dams for hydro generating plants occasioned by seasonal adjustments (rainy season), led to improved power generation. Additionally, in a bid to further improve and sustain power generation, the federal government received a $100 million credit facility from India. However, consistent power supply could be jeopardized if the development is not aided by improved distribution by DISCOs.
The nations foreign reserves have been on a steady rise. In the review week, reserves increased by $415.2 million from $28.3 billion on February 3, 2017 to $28.8 billion on February 10, 2017. The increase is likely the reflection of a sustained crude oil revenue complemented by moderating global crude oil price and increasing domestic production. This should help strengthen the ability of the CBN to foster forex liquidity, and thus help maintain stability in the domestic forex market. If sustained, it should also help improve the value of the naira overtime. Hence, the government should implement proactive and effective policy strategies to, not only, sustain improvements in oil revenue but also boost non-oil revenue.
The International Monetary Fund (IMF) slightly revised upward growth projections for SubSaharan Africa by 0.1 percentage point in 2017 but retained growth estimates for 2018.1 Precisely, growth estimate in the region was increased from 2.6 percent in April 2017 forecast to 2.7 percent in July 2017 forecast, while it was retained at 3.5 percent for 2018. The slight upward revision in 2017 is attributable to an upgrade in South Africas growth prospect from 0.8 percent in April 2017 to 1.0 percent in July 2017. Despite the upward 2017 revision, 2018 forecast for South Africa was revised down from 1.6 percent in April 2017 to 1.2 percent in July 2017. Growth forecast for Nigeria remained unchanged at 0.8 percent and 1.9 percent for 2017 and 2018 respectively.