Ongoing reforms to reduce Nigeria’s double-digit inflation in 2024 – CBN

NIGERIA’S double-digit inflation will decline in 2024 through the Federal Government’s reforms, the Central Bank of Nigeria (CBN) has said.

The apex bank gave the assurance in Abuja on Thursday, December 14, through its governor, Olayemi Cardoso, at a meeting with the National Assembly Joint Committee on Banking, Insurance and Other Financial Institutions.

Cardoso said reforms such as mopping up excess liquidity and a single exchange rate window would address the country’s volatile exchange rate.

He also projected less revenue from oil exports in the fiscal year, just as he declared that total trade from Nigeria’s foreign exchange market ( NFEM) stood at N18.8 billion in the third quarter (Q3) of 2023.

The apex bank chief told the committee that the outlook for the domestic economy in Nigeria for 2024 was very positive as both the inflation and exchange rates would withstand fluctuating pressures and stabilise.

“The outlook for the domestic economy remains positive and is expected to maintain a positive trajectory for 2024.

“Inflation pressures may persist in the short-term but are expected to decline in 2024. Exchange rate pressures are also expected to reduce significantly with the smooth functioning of the foreign exchange market”, he said.

He informed the committee that the unification of the exchange rate windows in June 2023 had ushered in a new approach to managing the exchange rate aimed at reducing arbitrage, rent-seeking behaviour and speculation in the market.

“The policy aims at creating a market where the demand and supply of foreign exchange determines the exchange rate.

” The premium has narrowed, and our focus on increasing the autonomous FX supply would lead to more stability and further narrowing of the premium,” he said.

According to Cardoso, the total trade in the third quarter of 2023 stood at N18.8 billion.

He added that exports within the same quarter were valued at N10.3 billion while total imports stood at N8.4 billion.

This represents a positive trade balance, which would lead to an increase of the external reserves “,he argued.

He, however, stated that due to prevailing domestic factors, fewer revenues would be earned from oil exports in 2024.

He said: “We expect less revenue from oil exports due to the production limit of 1.78mbpd in 2024. The Organisation of Petroleum Export (OPEC) approved quota for Nigeria is 1.8mbpd, higher than the 2024 budget assumption.






     

     

    ” However, the country’s production has been below these thresholds. The budget benchmark for 2023 was 1.69mbpd, but the highest production level during the year was about 1.35mbpd in Q3 of 2023.

    He cited reasons for the projected underperformance of the oil production target, which include crude oil theft, pipeline vandalization, and divestments by major oil companies away from Nigeria.

    Before the CBN Governor’s presentation, the committee’s chairman, Tokunbo Abiru (APC Lagos East), said the interactive session was organised for a statutory briefing by CBN in line with extant laws.

    In his remarks, the committee’s co-chairman, Bahir El-Rufai, commended the CBN governor and the entire management team on measures being put in place to stabilise the economy.

    Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.

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