The Central Bank of Nigeria did however introduce a 50 per cent cash reserve requirement for public sector deposits.
“At any point in time you’ve got to consider what’s happening within and outside your economy and also what emphasis you give depends on how severe the problems are. Most of the problems outside the country you can’t do anything about. What you can do is try to project how they’re likely to impact you,” Nigeria Central Bank governor Sanusi Lamido Sanusi told CNBC Africa on Tuesday.
“The slowdown in US growth, the recession in Europe, the slowdown in growth in China, all should theoretically translate into a moderation in commodity prices. So we can expect that oil price will be impacted negatively by that.”
Sanusi also explained that while there was progress in 2012, 2013 was not an era of fiscal consolidation. The level of government spending and government deficit as well as the rate at which excess crude savings have been decreased does not support consolidation.
“We had an increase in salaries of civil servants in 2011, you’ve got an increase in debt service and these are non-discretionary expenditures. So what we have said is we commend the government for the work it did in 2012 on fiscal consolidation and we do hope that in 2013 we’ll begin to retrace our steps in the second half to get back to that trajectory of fiscal consolidation,” added Sanusi.
There are fears that the US Federal Reserve’s tapering of quantitative easing will creating a shocks in the Nigerian economy, but Sanusi is confident that the shock will not result in an exodus of funds.
“We need to attract more money into power, downstream, into gas to power, agriculture. If we’re able to attract that kind of long-term investment then the balance changes,” he explained.
“We do keep track at any point in time of how much portfolio money came into the economy and see what percentage of our reserves that represents. So long as we keep track of it and we’re able to pay it off when it’s time, we don’t have a problem.”