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Private Business Development Center [CPPE] has warned that decisions taken by the Central Bank of Nigeria (CBN) Monetary Policy Committee (MPC) will be detrimental to the economy.
CBN Governor Olayemi Cardoso, who held earlier on Tuesday in Abuja, announced the committee’s decision to further raise the Monetary Policy Rate (MPR) by 50 basis points from 26.75% to 27.25% to tighten the inflation rate which stands at 32.15%.
However, in a statement sent to Ripples Nigeria on the same day, the Chief Executive of CPPE, Mr. Muda Yusuf, lamented that while other investors in the economy were craving for a breath of fresh air, the CBN chose to tighten the noose on them by using a tight monetary policy.
He said the CBN’s latest policy was contrary to the mood of most economic players and the desire to promote economic recovery and growth.
The statement read: “It is deeply disturbing that at a time when producers, entrepreneurs and other investors in the economy are crying out for a breath of fresh air, the CBN has instead chosen to tighten the noose on them by further tightening monetary policy.
“The central bank’s current policy choices run counter to the mood of most economic players and the desire to promote economic recovery and growth.
“What manufacturers and other investors need right now is oxygen and stimulus, not policies that will worsen an already stifling situation.
“MPR at 27.25%; CRR at 50% and asymmetric corridors at +500 and -100 are very difficult monetary conditions for most businesses to bear, given the prevailing macroeconomic and structural conditions.”
Yusuf noted that the second quarter Gross Domestic Product (GDP) figures clearly show that the economy is still in a slump because many important sectors of the economy are slowing down.
“This includes manufacturing and other subsectors of the industrial sector such as cement, food and beverage, chemical and pharmaceutical, trade, ICT, and real estate.
“Road transport, motor assembly, publishing and film sectors contracted during the quarter. Aviation, oil refining, textiles, livestock and mining and minerals sectors remained in recession.
“Tightening financial conditions in these circumstances seems inappropriate. The private sector should not be forced to pay the price of liquidity growth for which they are not responsible.
“The issue of excess liquidity must be addressed in the proper context. The injection of liquidity into the system has been largely driven by the public sector, as the Reserve Bank Governor rightly noted.”
“Therefore, the focus of the resolution must be in that context,” he said.
By: Babajide Okeowo
CPPE warns CBN’s ‘tightening’ policies will hurt Nigerian economy first appeared on Latest Nigeria News | Headlines from Ripples Nigeria.
