CBN Headquarters, in Abuja, FCT

CBN’s interventions, fiscal stimulus measures to strengthen the economy

*The Central Bank of Nigeria says its ongoing interventions and complimentary fiscal stimulus measures, coupled with efforts at diversifying the economic base, strengthening growth-enhancing sectors will boost food supply and crash domestic prices further in the economy

Gbenga Kayode | ConsumerConnect

The Central Bank of Nigeria (CBN) has emphasised the importance of its ongoing interventions and fiscal stimulus measures alongside efforts at further diversifying the economic base and strengthening growth-enhancing sectors in the country.

ConsumerConnect reports the Bankers’ Bank noted that some key sectors of the Nigerian economy, such as crude petroleum and natural gas, solid minerals, however, contracted in 2021, and there is a need for sustained stimulus to strengthen the recovery, which remains fragile.

Mrs. Aishah Ahmad, Deputy Governor, Financial Systems Stability Directorate of CBN, who is also a member of the Monetary Policy Committee (MPC), disclosed this development in a personal statement at the last meeting of the Committee, according to CBN.

In regard to how the Nigerian economy contracted November 2021, the Bank said that the manufacturing and non-manufacturing Purchasing Manager’s Indices (PMI) for November 2021 remained below the 50 Index points at 47.3 and 47.5 index points.

PMI readings above 50.0 signal an improvement in business conditions, while readings below 50.0 show a deterioration.

Fourth consecutive positive output growth in economy

The Deputy Governor, Financial Systems Stability Directorate, also stated that data recently released by the National Bureau of Statistics (NBS) indicated that domestic real GDP grew by 4.03 percent year-on-year in the third quarter of 2021 compared with 5.01 and -3.62 per cent in Q2 2021 and Q3 2020, respectively.

This marked the fourth consecutive positive output growth following the exit from recession in Q4 2020, Ahmad said, adding that real GDP grew by 11.07 per cent in Q3 2021, compared with -0.79 percent in the preceding quarter.


She also noted: “The improvement in real GDP was driven mainly by growth in the non-oil sector by 5.44 percent, reflecting the importance of ongoing CBN interventions and fiscal stimulus measures alongside efforts to further diversify the economic base and strengthen growth enhancing sectors.

“Some sectors, such as crude petroleum and natural gas and solid minerals, however, contracted, signifying the need for sustained stimulus to strengthen the recovery which remains fragile.”

The statement further said: “This is also reflected in both the manufacturing and non-manufacturing Purchasing Manager’s Indexes for November 2021 which continued to remain below the 50 index points at 47.3 and 47.5 index points, respectively.”

Marginal decline in food and core components in Q4 2021

The CBN Deputy Governor, however, stated that domestic prices maintained a downward trend with headline inflation (year-on-year) decelerating for the seventh consecutive month to 15.99 percent in October 2021 from 16.63 percent in the previous month.

The decrease, Ahmad said, was attributed to a marginal decline in both the food and core components to 18.34 and 13.34 percent October from 19.57 and 13.74 percent September respectively.

According to the CBN chief, although decelerating, inflation has remained at double digit and above the Bank’s benchmark of 6-9 percent, driven majorly driven by food component, high electricity tariffs and exchange rate adjustments in the Nigerian economy.

Ahmed, nonethelesss, noted with the outset of harvest period in the country, sustained CBN’s interventions and complementary fiscal policies to boost food supply, domestic prices are expected to decline further in the near term.

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