The Central Bank of Nigeria (CBN) Governor, Olayemi Cardoso, has indicated that the prices of Premium Motor Spirit (PMS) are expected to stabilize or decrease this year. This development is attributed to the commencement of operations in both government and privately-owned refineries. Cardoso shared this information at the launch of the Nigerian Economic Summit Group (NESG) 2024 Macroeconomic Outlook Report in Lagos on January 24.
Dangote Refinery has already started production, while the Port Harcourt Refinery is anticipated to commence production soon.
In collaboration with the Ministry of Finance and the NNPCL, the apex bank is working to ensure that all foreign exchange (FX) inflows are returned to the Central Bank to enhance reserves accretion.
Cardoso expressed the belief that the naira is undervalued and emphasized coordinated measures on the fiscal side to expedite genuine price discovery in the near term. He acknowledged the challenges faced by the economy but assured that the ongoing bold reforms across various segments are aimed at addressing these challenges sustainably.
The NESG 2024 Macroeconomic Outlook Report, summarized by Dr. Olusegun Omisakin, Chief Economist at NESG, recommends stabilizing the exchange rate through a functional and transparent foreign exchange market. This involves enhancing market liquidity, reducing administrative restrictions, and ensuring efficient allocation of FX reserves.
Cardoso highlighted the positive trajectory of the nation’s economy in 2024, citing expected improvements in crude oil prices and production. He noted the potential for growth in Industry, Services, Agriculture, Mining, Electricity, Gas & Water Supply sub-sectors, driven by market-based reforms and private investment.
Addressing inflationary pressures, Cardoso mentioned the CBN’s inflation-targeting policy, aiming to rein in inflation to 21.4 percent in 2024. Improved agricultural productivity and easing global supply chain pressures are expected to contribute to decreasing inflation.
The anticipated stability in the foreign exchange market for 2024 is attributed to the reduction in petroleum product imports and the implementation of a market-determined exchange rate policy by the CBN. The NESG’s Macroeconomic Outlook Report emphasizes the necessity of economic transformation under the theme “Economic Transformation Roadmap: Medium-Term Policy Priorities.”
Stable exchange rates are deemed crucial for economic growth, employment, and social cohesion, according to the NESG report. The report also advocates for increased capital inflows to fortify external reserves, and fiscal measures such as reducing the public debt service-to-revenue ratio to create fiscal space for economic development initiatives.
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