By Omoh Gabriel, Business Editor
The spread between deposit rate and lending rate has remained high at 20.14 per cent as maximum lending rate as at December 2010 was 21.84 while average deposit rate stood at 1.95 per cent.

The CBN in its economic report to the monetary policy committee said that “the average maximum lending rate declined from 22.20 in September, 2010 to 21.84 per cent in November 2010. The average prime lending rate also fell from 16.66 in September to 16.11 per cent in November, 2010.

This has confirmed the allegations that the real sector can not access credit as a result of the prevailing high interest rate.

According to the CBN “The weighted average savings rate declined consistently from 3.2 and 1.95 per cent in March and June, 2010 to 1.49 and 1.48 per cent in September and November, 2010, respectively. The consolidated deposit rate which declined from 2.09 per cent in June to 2.07 per cent in September rose to 2.36 per cent in November, 2010.

Thus, the spread between the average maximum lending rate and the consolidated deposit rate widened from 19.94 per cent in June to 20.14 per cent September, before narrowing to 19.48 per cent in November, 2010.

The CBN disclosed that “At the foreign exchange market, total demand and sales in 2010 amounted to $29.78570 billion and $25.16781 billion, respectively, which were equivalent to an average of $307.10 million and $259.46 million per auction, respectively.

This, the apex bank said, compared with the total demand and sales of $35.47113 billion and $24.20480 billion recorded in 2009. The sales/ demand ratio per auction rose from 80.4 per cent in September to 91.0 per cent and December, 2010. On the average, 84.11 per cent of foreign exchange demand was met in 2010.

In December, 2010 it further said  the WDAS exchange rate recorded a depreciation of N 0.26 or 0.17 per cent compared to the preceding month. In the BDC segment, the market recorded a depreciation of N 1.44 or 0.94 per cent. Similarly, at the inter-bank market, the average selling rates in December, 2010 indicated a depreciation of 0.22 per cent from that recorded in November, 2010″.

According to the CBN “The country’s gross external reserves stood at $32.34 billion at end-December 2010, indicating a decline of $2.16 billion or 6.3 per cent compared with $34.50 billion at the end of September 2010.

The reserve level fell by $11.04 billion or 25.45 per cent when compared with $43.38 billion as at end-December, 2009. However, as at January 20, 2011, the external reserves stood at $33.26 billion, representing an increase of $0.92 billion or 2.84 per cent when compared with end-December level.

The report also indicated that, “total foreign exchange inflows from January to December, 2010 was $27.87704 billion, representing an increase of $2.84077 billion or 11.35 per cent over the $25.03627 million recorded in the corresponding period of 2009. Of this inflow, crude oil/gas revenue was $26.16669 billion or 93.86 per cent.

Total outflows for the same period amounted to $37.92357 billion. The CBN funding of the foreign exchange market accounted for $24, 83627 billion or 65.49 per cent of the outflows. Thus, there was a net outflow amounting to $10.04653 billion in 2010 compared with $10.48483 recorded in the corresponding period of 2009″

The CBN said that “on the fiscal side, total federally-collected revenue for the period January – November 2010 stood at N 5.72576 trillion, of which oil revenue accounted for N 4.85740 trillion or 84.83 per cent.

The amount collected was lower by N 772.62 billion or 11.89 per cent relative to the proportionate budget estimate of N6. 49838 trillion. The overall fiscal operations of the Federal Government for the period (January to November, 2010) resulted in a deficit of N 1. 52933 trillion.

The deficit was financed through DMO borrowing from the domestic market (N893.79 billion), FGN Share of Excess Crude Account (N199.54 billion), Privatisation Proceeds (N6.36 billion), World Bank Loan (N75.03 billion) and Loans from Special Accounts (N337.56 billion).

According to the CBN “Net aggregate credit to the economy grew by 13.4 per cent, on an annualized basis, in December, 2010, compared to 59.6 per cent recorded in December, 2009.

“This was driven mainly by the substantial credit to the Government which grew by 67.83 per cent, while credit to the private sector fell by 4.92 per cent (annualized) in December 2010 as against the benchmark of 31.54 per cent for 2010”.

The CBN said that in terms of near-term outlook, the real GDP growth in 2011 could be higher than in the preceding year based on the assumptions of the resolution of the Niger Delta crisis and government’s amnesty programme for militants; improved oil prices and output; prospects of high agricultural output; impact of banking sector reforms and the intervention funds; stability in the supply and prices of petroleum products; and expected improvement in electricity supply.

With regard to prices, CBN projections indicated that the year-on-year headline inflation would conducted by Brickfield Road Associates (BRA) Limited indicated that: all the sectors surveyed expected an improvement in the economy. Employment was expected to rise but manufacturing sector was anticipated to remain unchanged.

Inflation was generally expected to rise in the next three months and interest rate also was generally expected to rise in the next three months; Input Cost was expected to rise ; most sectors expected output to rise the CBN report stated.