The Central Bank of Nigeria, CBN, has expressed concern over the borrowing attitude of government, saying the pace has exceeded the target for the 2017 fiscal year. The CBN said this at its Monetary Policy Committee, MPC, second quarter 2017 meeting.
The MPC communique reads in part: “The Committee was concerned that credit to government continued to outpace the programmed target of 33.12 per cent for fiscal 2017, while credit to the private sector declined considerably far below the programmed target of 14.88 per cent.”
CBN Governor, Godwin Emefiele said the Net Domestic Credit, NDC, grew by 1.40 per cent in April, 2017, annualized to 4.21 per cent, which is significantly below the 17.93 per cent provisional growth benchmark for 2017.
He noted that net credit grew by 24.08 per cent over end-December 2016, representing an annualized growth of 72 per cent.
The communique further called for increased lending to the private sector by banks.
“On the financial stability outlook, the Committee noted that in spite of the banking sector’s resilience, the weak macroeconomic environment has continued to exert pressure on the banking system. The MPC urged the CBN to intensify its surveillance, in order to address emerging vulnerabilities”, it added.
However, CBN at the meeting retained all its key policy rates, citing challenges weighing down the domestic economy and uncertainties in the global environment.
The decision also followed announcement by the National Bureau of Statistics, NBS, that the nation’s economy contracted for the fifth consecutive quarter, as the real Gross Domestic Products, GDP, declined by 0.52 per cent in the first quarter of 2017.
According to the NBS, “In the first quarter of 2017, the nation’s Gross Domestic Product, GDP, contracted by -0.52 per cent (year-on-year) in real terms, representing the fifth consecutive quarter of contraction since Q1 2016.
“This is 0.15 per cent higher than the rate recorded in the corresponding quarter of 2016 (revised to -0.67 per cent from -0.36 per cent) higher by 1.21 per cent points from rate recorded in the preceding quarter, (revised to -1.73 per cent from -1.30 per cent).
“Quarter-on-quarter, real GDP growth was 12.92 per cent. During the quarter, aggregate GDP stood at N26.03 trillion in nominal terms, compared to N22.24 trillion in Q1 2016, resulting in a nominal GDP growth of 17.06 per cent.”