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CBN Throws Weight on Deregulation
- By Simon Ugwu
- Published November 10th, 2009
- MoneyWorld
- Unrated
REACTING to the recent report by some sections of the media, the Central Bank of Nigeria (CBN) has stated that it supports the federal government’s policy of deregulation of the downstream sector of the petroleum industry.
Mohammed Abdullahi, head, Corporate Affairs, CBN, stated that the press reports that alleged that the apex bank was against deregulation arose from the Monetary Policy Committee, (MPC) briefing by Sanusi Lamido Sanusi, governor, CBN, last week.
According to him, “the CBN wishes to put the issues in the right context. At no time during the briefing did the governor express the bank’s opposition to the planned deregulation of the oil industry as portrayed by a section of the media. The MPC, in reviewing the outlook for the economy in the remaining quarter of the year, only made the following observation that ‘while inflation had de-accelerated, it is important to recognize that seasonal factors and the planned deregulation of prices of petroleum products (through cost of transportation) pose a major risk to inflation outlook in the near to medium term’.
The CBN however took cognizance of the moderating impact of the improved agricultural output as well as the slack in demand as a result of the slow growth in monetary aggregates in its decision to retain the Monetary Policy Rate, MRR at 6 per cent. From the above, the CBN made it clear that there was no basis to be wary of the inflationary effects.”
Abdullahi noted that the governor during the question and answer session also made it clear that while inflationary threat was there, the long term positive impact of deregulation will far outweigh the initial pain as more funds will be available to the government for key infrastructure and power which directly impact on economic growth. “He concluded that the investment in infrastructure and power will positively impact on output significantly and therefore dampen the inflationary threats”, Abdullahi added.
“The CBN therefore wishes to state categorically that it is in full support of the federal government’s policy on deregulation, in view of the inherent benefits and advantages to the economy,” he reiterated.
Mohammed Abdullahi, head, Corporate Affairs, CBN, stated that the press reports that alleged that the apex bank was against deregulation arose from the Monetary Policy Committee, (MPC) briefing by Sanusi Lamido Sanusi, governor, CBN, last week.
According to him, “the CBN wishes to put the issues in the right context. At no time during the briefing did the governor express the bank’s opposition to the planned deregulation of the oil industry as portrayed by a section of the media. The MPC, in reviewing the outlook for the economy in the remaining quarter of the year, only made the following observation that ‘while inflation had de-accelerated, it is important to recognize that seasonal factors and the planned deregulation of prices of petroleum products (through cost of transportation) pose a major risk to inflation outlook in the near to medium term’.
The CBN however took cognizance of the moderating impact of the improved agricultural output as well as the slack in demand as a result of the slow growth in monetary aggregates in its decision to retain the Monetary Policy Rate, MRR at 6 per cent. From the above, the CBN made it clear that there was no basis to be wary of the inflationary effects.”
Abdullahi noted that the governor during the question and answer session also made it clear that while inflationary threat was there, the long term positive impact of deregulation will far outweigh the initial pain as more funds will be available to the government for key infrastructure and power which directly impact on economic growth. “He concluded that the investment in infrastructure and power will positively impact on output significantly and therefore dampen the inflationary threats”, Abdullahi added.
“The CBN therefore wishes to state categorically that it is in full support of the federal government’s policy on deregulation, in view of the inherent benefits and advantages to the economy,” he reiterated.
