By CHINEDU IBEABUCHI

The Central Bank of Nigeria, through its Monetary Policy Committee, MPC has called for the setting up of an independent legal structure that will be charged with setting oil benchmark output and price.

The committee said this should be manned by independent experts who are shielded from political interference and interests.

In a communiqué issued at the end of the Monetary Policy Committee, MPC, the committee raised concern that the moderation in money market rates was only beneficial to prime customers, who enjoyed a fair degree of reduction in rates on their loan facilities.

With regard to the balance sheet of the federal government, the Committee was of the view that it has become imperative to shift away from looking at the size of the deficit and borrowing alone, to emphasizing the quality of expenditure and decisions on the allocation of resources.

The Committee commended the fiscal authorities for keeping the fiscal deficit firmly in line with the 2012 budget and improving the revenue profile of the federal government by plugging several of the fiscal leakages.

It called on the government to significantly increase capital spending and increase its focus on improving on governance and transparency in the public service. On the oil price benchmark used in the 2013 budget, the MPC reaffirmed its support for maintaining the US$75/barrel proposed by the fiscal authorities and noted that this has become even more critical in light of evidence that output projections may have been overly optimistic.

In this regard, the Committee called on the government and the National Assembly going forward, to borrow from the Chilean experience with regard to the setting of the parameters for the preparation of the National Budget to avoid the perennial rancor between the Executive and the Legislature on benchmark oil price.

Specifically, the Committee called for the setting up of an independent legal structure that will set the benchmark output and price underpinned by the long term trajectory of output and price, by independent experts who are shielded from political interference and interests.

On monetary rate, it said the interbank call and OBB rates, which opened at 16.77 and 16.40 per cent on September 19, 2012, closed at 12.03 and 11.70 percent, respectively, on October 30, 2012. The average interbank call and OBB rates for the period were 11.68 and 11.38 percent, respectively.

The foregoing notwithstanding, the Committee was concerned that the moderation in money market rates was only beneficial to prime customers, who enjoyed a fair degree of reduction in rates on their loan facilities. The average prime lending rate declined from 16.96 percent in July to 16.48 percent in October.

The average maximum lending rate, however, increased from 23.45 to 24.65 percent during the period while the weighted average savings and term deposit rate stabilized at 5.30 percent during the period.