Yesterday, The Monetary Policy Committee of the Central Bank of Nigeria on Tuesday warned Nigerians to brace for a longer period of low revenue from oil sources, which would necessitate hard and uncomfortable choices.
The committee, in a communique issued at the end of its first meeting for the 2016 fiscal period in Abuja, observed that while the period of low oil prices, which occurred in 2005, lasted for a maximum of eight months, the current situation was expected to continue over a longer period of time.
The CBN Governor. Mr. Godwin Emefiele, who read out the communique shortly after the meeting, said the development would necessitate huge sacrifices from Nigerians.
Crude oil prices had declined from a peak of $114 barrel in July 2014 to $30.25 per barrel on Tuesday.
The CBN governor said since oil prices had been on a steady decline, certain trade-offs would have to be envisaged and accommodated.
“The committee observed that the last episode of low oil prices in 2005 lasted for a maximum period of eight months. However, the current episode of lower oil prices is projected to remain over a very long period.
“Consequently, it is imperative to brace 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 trade-offs must be envisaged and duly accommodated.”
As a result of the drop in oil revenues, the governor said the need for consistently sound and coordinated macro economy policies had become inevitable.
In view of this, Emefiele said the central bank was currently refining the framework for foreign exchange management in order to ensure a more effective and liquid forex market.
He added, “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.
“Consequently, the bank is fine-tuning the framework for foreign exchange management with a view to ensuring a more effective and liquid foreign exchange market, taking into account Nigeria’s strategic development priorities, with the policies being designed within an environment of regularly ensuring consistency with monetary and fiscal policies.”