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Yar’Adua’s illness not affecting economy – CBN

CBN Governor Sanusi Lamido Sanusi
CBN Governor Sanusi Lamido Sanusi

By Emma Ujah, Babajide Komolafe & Oscarline Onwuemenyi
ABUJA — The Governor of the Central Bank of Nigeria , Mr. Sanusi Lamido Sanusi, has assured investors in the Nigerian economy of the viability of their investments in the face of growing concerns about President Umaru Yar’Adua’s ailment on the national economy.

Meawhile, CBN said the country recorded jobless economic growth of 6.9 per cent last year.

The apex bank also warned against over optimistic expectations of increase in crude oil price, saying that the recent increase in crude oil prices was driven by factors that can be reversed any moment.

At the end of a two-day Monetary Policy Committee (MPC) meeting, the apex bank extended the guarantee for interbank placements till December 31, 2010 and maintained the Monetary Policy Rate at 6.0 per cent.

Reviewing the performance of the economy in 2009, the MPC, in a statement issued at the end of its meeting, said the economy grew by 6.9 per cent up from 5.98 per cent recorded in 2008.

It stated, “Provisional data from the National Bureau of Statistics (NBS) indicated that real Gross Domestic Product (GDP) grew by 8.23 per cent in the fourth quarter of 2009, up from 4.50, 7.22 and 7.07 per cent in the first, second, and third quarters, respectively.  Overall GDP growth for 2009 was projected at 6.90 per cent which is significantly higher than the 5.98 per cent recorded in 2008”.

Sanusi assures investors

Sanusi, who gave the assurance yesterday at a briefing on the outcome of the  212th MPC meeting of the bank, in Abuja, said  the political system is fully functional with the presence of the Vice-President and the cabinet.

He said, “There is a system that works; there are ministers who do their jobs, and you’ve got the government agencies all working as well as individuals in the private sector working.

”We are hoping for the speedy recovery of the President and his return, but we have not felt any form of vacuum. Every approval that we require has been given; I haven’t felt anything and I am sure government has continued to work.”

He said investors were merely reacting to reports in the local media, adding that it was unfortunate that “a sad, personal matter of a very important individual who is unwell,” was being politicised.

“We hope he has a speedy recovery and comes back to take whatever decisions that need to be taken but the Vice- President is there and he is in charge of government and I don’t see any problem at all.”

In a statement issued at the end of the MPC meeting, the apex bank said it “Welcomed the optimistic growth forecast for 2010 by the NBS but noted that the growth had been without employment owing to the stagnation in the manufacturing sector, and the failure to link growth in agriculture to industry.

”The Committee stressed the need for improvements in power and infrastructure to further enhance and sustain the growth process.”

On the other hand it,  “Further cautioned against being overly optimistic in our expectations about the outlook for the price of oil, and welcomed the prudent benchmark used in the budget for 2010.”

The Committee noted, “That the current price of crude oil was being driven by the low value of the US dollar and the low interest rates in the US and once these reverse crude oil prices may be lower than they are today.

“It expressed the hope that all stakeholders will give support to the Finance Ministry in keeping to this benchmark price, and resist the temptation to push for an increase based on short-term consideration.”

On inflation

In its assessment of  inflation  in the economy, the committee said, “Inflation outlook for 2010 remains uncertain, but a combination of both domestic and international economic developments, namely the planned impact of the full deregulation of petroleum products prices, the expansionary fiscal outlay, the quantitative easing measures undertaken by the Bank, the resolution costs associated with the banking sector reforms, possible capital inflows to strengthen commercial banks balance sheets, and the rising international commodity prices, pose serious threats to domestic price movements and, hence, inflation risk in the months ahead.

”Against this background, the Committee emphasized the need to continue to monitor price developments with a view to creating an enabling environment for sustainable economic growth and employment.”

At the end of its meeting, the Committee among other things decided to extend the guarantee for interbank placements and maintain the Monetary Policy Rate at 6.0 per cent.

Announcing these decisions, the Committee stated, “The Monetary Policy Rate (MPR) will remain unchanged at six per cent with the asymmetric corridor of interest rates remaining at 200 basis points above the MPR and 400 basis points below the MPR.

On economic  growth

On the growth of the economy, Sanusi pointed out that Nigeria’s economy had grown in the last quarter of 2009 by seven  per cent, even as he stressed that the expected growth in the non-oil sectors of the economy would have more impact on the economy in the new year.

He said, “If you cut agriculture as 40 per cent, your GDP, if you have a good rainfall and agriculture grows by only five per cent that adds two per cent to your growth. We’ve had good weather and we have had increases in production among a lot of small holder farmers.

“In the last quarter of last year, we had a very large increase in hotel occupancy, service and telecommunications have  done very well. You had things like the Calabar Carnival, and you remember that was the year we had the Under-17 World Cup, so there has been positive impact as far as the services is concerned,” the bank added.


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