- As Minister tells MTN to drop lawsuit over fine
Central Bank of Nigeria (CBN) has said that Nigeria must make hard choices for survival as low government revenues from oil sources continues.
CBN Governor, Godwin Emefiele, who disclosed this yesterday at the end of the Monetary Policy Committee, MPC’s, meeting in Abuja, said the country would have to contend with hard and uncomfortable choices until the economy transits to more sustainable sources of revenue, consistent with the current economic realities.
He said: “It is imperative to brace up for a longer period of low government revenues from oil sources, which would necessitate hard and uncomfortable choices as the economy transits to more sustainable sources of revenue, consistent with the economic realities and strategic objectives of the country. In the circumstance, certain tradeoffs must be envisaged and duly accommodated.
“In view of the foregoing, the imperative for consistently sound and coordinated macroeconomic policy has become inevitable. In the medium term within which monetary policy is cast, the need to allow policy to produce the desired outcomes becomes a key consideration in the policy mix.”
Emefiele, who spoke broadly on key developments at the global and domestic environment, including inflation and foreign exchange rate dynamics, predicted slower growth of the domestic economy in the current quarter when compared with the corresponding period of last year.
He hinged the projections on the current global oil price trend, which is projected to hold low over the medium to long term, with the attendant implications for government revenue and foreign exchange earnings.
The CBN Governor pointed out that given the headwinds in the domestic economy and the uncertainties in the global environment, the MPC decided by a unanimous vote to retain the MPR, at 11 per cent; CRR at 20 per cent; Liquidity Ratio at 30 per cent; the asymmetric corridor at +200 basis points and -700 basis points.
On the raging controversy over the desirability or otherwise of naira devaluation for the economy, Emefiele said the country would maintain the status quo for now, adding however that the Committee was already working on different scenarios or models which would be looked into based on developments in the economy.
We will look at scenarios under different crude prices. And we will continue at management and monetary policy committee. We will continue as much as possible to continue to share our thoughts with the fiscal authorities with a view to harmonising our positions to ensure that notwithstanding the drop in crude prices that we are able to continue to run government and continue to do business.
“So far, we have seen this now for almost about 14 months and there is no green light yet at the end of the tunnel. We will continue to be alive to our responsibilities to continue to ensure that both monetary and fiscal authorities work together towards ensuring that we provide for all the needs of Nigerians,” he added.
He noted that despite the current challenges, the Committee remained guided by evidence underpinned by credible data in its holistic evaluation of the emerging scenarios and in its assessment of policy choices.
According to him, the Committee believes that given sound and properly coordinated monetary, fiscal, and external sector policies, there was wide room for optimism about the medium to long term macroeconomic prospects for the economy, especially, given the clarity in the policy direction of the administration, the various interventions in the real sector; gradual improvement in the power sector, and the reinvigorated fight against corruption.
He reported on the Committee’s acknowledgment of the continued liquidity surfeit in the financial system stemming partly from the recent growth-stimulating monetary policy measures, as well as the tendency of the banks to invest excess reserves in government securities, rather than extend credit to the needed sectors of the economy.
Emefiele explained that that challenge necessitated the Committee’s decision, urging Deposit Money Banks, DMBs, to improve lending to the real sector, as part of their patriotic obligations to the country. He said MPC also emphasised the necessity of coordination between monetary and fiscal policies as a prerequisite for resolving the nation’s economic problems, particularly, steering the economy away from oil dependency.
In the meantime, South African cellphone operator MTN should drop its legal action over a $3.9 billion fine imposed in Nigeria to help facilitate talks on a possible settlement, the Nigerian telecommunications minister said on Tuesday.
The Nigerian Communications Commission (NCC) slapped a $5.2 billion fine on MTN in October for failing to disconnect users with unregistered SIM cards but after weeks of negotiations reduced it by 25 per cent.
Reuters reported that MTN, which makes about 37 percent of its revenue from Nigeria, then filed a suit in the West African country questioning NCC’s legal grounds for imposing the penalty.
“I’m not aware of any out-of-the-court settlement,” telecoms minister Adebayo Shittu told reporters.
Shittu said President Muhammadu Buhari will have the final decision on the matter, adding that MTN might be advised to withdraw the court case filed against the fine.
“If they withdraw it creates a better environment, an environment where there is no stress or pressure on either side,” he said.
A judge in Lagos, Nigeria’s commercial capital, last week gave the company until March 18 to try to reach a settlement with the Nigerian authorities over the fine. The prospect of a lower fine boosted MTN shares.
The fine equates to more than twice MTN’s annual average capital spending over the past five years.
Nigeria has been trying to halt the widespread use of unregistered SIM cards amid worries these are being used for criminal activity, including by the militant Islamist group Boko Haram.
National Mirror with additional report from Tribune
