Emefiele To Senate: Nigeria’s Economy In Deep Crisis

The Governor of the Central Bank of Nigeria (CBN ), Mr. Godwin Emefiele, yesterday told the Senate that the nation's economy had entered into a deep crisis, as it remained recessive in the first and second quarters of the 2016 fiscal year.

Emefiele, who met with the apex legislative chamber in a closed- door session for two hours, also said that Nigerians would have to pay more sacrifices because inflation would further skyrocket.

This was as the apex chamber appreciated the enormous economic challenges facing the nation , commending and supporting the CBN for its policies so far to strengthen the ailing economy. A senator, who attended the session, disclosed to
New Telegraph that Emefiele had to own up to the true position of the economy because it appeared that the ruling All Progressives Congress (APC ) had lost hope of proffering solution to the worrisome situation.

The senator, who spoke under the condition of anonymity , noted that based on the briefing of the CBN boss, the Federal Government might not be able to sustain up to 75 per cent of salary payment in the 2016 budget implementation. The lawmaker also expressed pessimism on the ability of the economic team of President Muhammadu Buhari to come up with strategies that would use the agricultural sector to diversify the economy.

The senator, who is a member of the opposition Peoples Democratic Party (PDP), said that the only way to rescue the economy from further recession was for government to reflate the system, stressing that it was the measure applied by other economies that faced the challenge of recession.

“The CBN governor admitted that the economy is in trouble. And from the look of things, it is not going to get better. Salaries may not get 75 per cent implementation when you see the level of budget implementation so far. The CBN governor admitted that the economy was in recession in the first quarter and in the second quarter. In fact, they may not get 60 per cent implementation. “Reflating the economy is what other economies in recession have done, but that is not happening here.

The economic team is not able to come up with strategies on how they can even use agriculture to diversify the economy. ” The source further said that Emefiele did not want to disclose certain critical issues raised by the senators because they were serious policy issues that had to do with the competence and capability of the ruling party.

However, in a press statement issued by the leadership of the Senate at the end of the executive session, the Upper Chamber said that the governor of the CBN presented a comprehensive and lucid account of the performance of the Nigerian economy in the last one year.

The statement claimed that Emefiele ’ s presentation began with current global economic conditions, which had been characterised by external shocks, including the sharp decline in commodity prices, the geopolitical tensions along important global trading routes and tightening of Monetary Policy in the United States of America.

It further said that the appearance of Emefiele was in line with Section 8 of the Central Bank of Nigeria Act 2007, which requires that the governor of the bank provide, to the National Assembly, periodic updates on the activities of the bank as well as the performance of the economy.

The Senate ’s statement reads: “He drew linkages of these occurrences with the Nigerian economy, especially with respect to the over 70 per cent decline in oil prices from about $116 per barrel in June 2014 to about $30 per barrel earlier in the year.

“The governor’s presentation also gave us an insight into the bank ’ s decisions in the Foreign Exchange Market and the rationale underlying the recent re- introduction of a flexible exchange rate mechanism in Nigeria.

“He also delved into the health of the financial system and discussed the bank ’ s detailed examinations of financial institutions, as well as its zero tolerance for insider dealings by board and management of deposit money banks.

In sum, the governor declared that the strategic health of Nigeria ’s financial system is still strong at this time. “After the presentation , many senators asked a host of pertinent questions and raised issues concerning the banking system, the slippage in economic growth for the first quarter of 2016, the gradual rise in inflation , fall in foreign exchange reserves and policy coordination between the fiscal and monetary authorities.

“Following an exhaustive response by both the governor and his team , the Senate acknowledged that these are indeed difficult times all over the world and not just in Nigeria. “The Senate also acknowledged the pains that many people may be facing at this time , especially in light of increases in price of electricity and fuels.

But having carefully considered the policies of the CBN, the Senate would like to commend and support these policies because they are mostly geared towards increasing local production, creating jobs here in Nigeria, safeguarding our commonwealth and expanding economic opportunities and growth in Nigeria.

“It is critical that we all put hands together to seek long term solutions to our underlying problem of non -diversification of foreign exchange earnings and revenues, rather than pointing fingers or apportioning blames.