From Uche Usim, Washington DC
With inflation jolting many nations across the globe, the Central Bank of Nigeria (CBN) Governor, Mr Godwin Emefiele, has assured that a cocktail of potent monetary policies were being administered to tackle the inflation nightmare in Nigeria.
Global inflation has remained the center of discourse at the ongoing 2023 Spring Meetings organised by the International Monetary Fund and the World Bank in Washington DC,
On its part, the IMF has called on all countries, especially those in the low-income category, to closely align their fiscal and monetary policies to combat inflation and build buffers to absorb unforeseen circumstances.
Emefiele, at a media interface, said the tightening stance of the apex bank, which has been applauded by the IMF, was one of the ways of tackling inflation.
He also called for aggressive efforts in growing revenue and prudential spending to contain the rampaging inflation.
He said: “So the focus remains that monetary authorities must continue to focus on inflation to bring it down but while they are doing that, they must also keep their eyes on banking systems stability through monitoring, supervision and regulatory frameworks. For the fiscal, because of the limited fiscal space, the IMF insists that countries need to reduce their spending but in my case, I would say, if you want to spend, you must grow revenue to be able to spend. That’s what you would imagine the politicians don’t want to hear. But I think that it’s important that you must raise revenue so that you don’t have yourself constrained in an environment where there is debt and where the conditions are very tight and very limited, where interest rates are very high, if interest rates are high, it could create a lot of burden on economies, the only option is to expand the revenue base so as to be able to spend”, he explained.
Emefiele reckoned that post-COVID, the global economy was beginning to recover quite aggressively as interest rates were very low for a sustained period of time.
He further noted that inflation in Europe and developing economies was also low.
“But unfortunately, as a result of the challenges that came up in 2022, the war in Russia and Ukraine, high interest rates and inflation in the US, the need to raise interest rates and its impact on economies have gotten us to where we are today.
“The forecast at these meetings remains that yes, a lot of work has been done in 2022, growth is returning again, but it is still at sub-optimal level. Inflationary pressures continue even though it is coming down as a result of measures being taken by monetary authorities to bring down inflation rate. But, it still remains at high levels globally, such that the global inflation rate is projected at 7 percent, and remains very high.
“The high point of the consequences of what we have seen in 2022, is that poverty level has risen quite astronomically and it was well discussed here. Over 700 million people are being struck by poverty. Food insecurity has also risen quite tremendously, to the extent that over 350 million people are hit by extreme food crises all over the world. Even the IMF themselves talk about the fact that the lending portfolio, the debt have reached all times in two decades that the IMF has seen in its books and they are already warning that unfortunately they may not be in a position to do much for countries that require more debt to restructure their balance sheet and then keep going on,” Emefiele added.