Fuel pump price to reduce soon – CBN

Central Bank of Nigeria (CBN) Governor Olayemi Cardoso has said that the pump price of Premium Motor Spirit (PMS) petrol will come down this year as government and private refineries begin operations.

He was speaking at the launch of the 2024 Macroeconomic Outlook Report of the Nigeria Economic Summit Group (NESG) in Lagos on Wednesday, January 24.

Mr. Cardoso said the expected stabilization or reduction in fuel costs will have far-reaching impacts across a variety of sectors and will significantly contribute to overall economic efficiency and resilience.

While the Dangote refinery has already started production, the Port Harcourt refinery is also expected to start production at any time.

Cardoso said the Apex Bank, Ministry of Finance and NNPCL are working together to ensure that all foreign exchange inflows are channeled back to the Central Bank to facilitate the accumulation of foreign exchange reserves.

He said, “the naira, which is exchanged at about 1,370 naira to the dollar on the parallel market, was undervalued.”

“We believe that the naira is currently undervalued and, coupled with coordinated measures on the fiscal side, we will expedite genuine price discovery in the near term,” – Mr. Olayemi Cardoso

In a summary of NESG’s 2024 Macroeconomic Outlook Report in Lagos, NESG Chief Economist, Dr. Olusegun Omisakin, said that some of the benefits of achieving stable and rational pricing of Nigeria’s exchange rate are: stabilizing exchange rates through a well-functioning and transparent foreign exchange market which will improve market liquidity through periodic auctions, reduce administrative constraints, and ensure efficient allocation of foreign exchange reserves.

“Adopting a managed float system, regulating speculative activities, and encouraging foreign investments would bolster market confidence.

Besides, access to FX needs to be realigned to facilitate international trade and transactions – as such, local access needs to be to the limit of the Naira equivalent. Reinforcing monetary policies for inflation control and export diversification would promote currency stability,” the report advised

Mr. Cardoso acknowledged the challenges facing the economy and the resistance of various stakeholders to proposed solutions.

He said the economy is currently at a tipping point and that bold reforms being undertaken in various sectors of the economy, while initially difficult, will ultimately overcome these challenges in a sustainable manner. He asserted that this was his goal.

“I am confident that we are already witnessing positive outcomes, and these will undoubtedly become more apparent in the near future.

The dedicated and relentless efforts being made are certain to bring about significant and positive changes for our economy.”

“Indeed, recent reports from international rating agencies such as Fitch, Moody’s, and commendations from multilateral banks like 3 Classified as Confidential the World Bank reflect this, with upgrades to Nigeria’s ratings from stable to positive.

These reports acknowledge the possible reversal of the deterioration in the country’s fiscal and external position due to the authorities’ reform efforts,” – Cardoso.

“While noting the painful adjustments, they all identify a direction of travel that will unlock the much needed growth and development for our economy in the medium to long term.” He added.

He said that increasing food prices and foreign exchange problems will be solved soon. On economic growth, he said the global economy is currently dealing with ongoing challenges, including inflation and weak growth.

Although Gross Domestic Product (GDP) growth exceeded expectations in 2023, gross domestic product (GDP) growth is expected to slow further in 2024 due to tightening financial conditions, slowing economic growth, and declining business and consumer confidence.

Similar to last year, the International Monetary Fund (IMF) expects global economic growth in 2024 to slow to 2.9% from 3.0% in 2023, with Asia driving most of the global economic growth.

He said the national economic forecast paints a positive outlook as the Federal Government of Nigeria estimates real GDP at 3.76% in 2024, slightly above the forecast of 3.75% for 2023.

This hope is supported by the government’s implementation of important reforms aimed at improving the economic situation, he said.

The key factor leading to the agreement is the expectation of improvement in oil prices and production, underlining the important role the oil industry must play in driving development.

Cardoso said the agreement for the trade, services, agriculture, mining, electricity, oil and water sub-sectors reflects the impact of trade-led reforms through private investment and SME-led development that will help stimulate the economy. and trust.

“Government reforms in the mining and energy sub-sectors are expected to serve as a catalyst for growth and development. 3. While the potential for growth exists in 2024, each sector may encounter unique challenges and opportunities,” he said.

He said inflation is expected to fall in 2024 as the Central Bank’s economic policy aims to control inflation at 21.4%.

This will benefit the economy by increasing consumer confidence and purchasing power as agricultural production increases and pressure on global supply decreases.

He explained that the adoption of the inflation target by the Central Bank involves open communication, use of financial management tools and cooperation with authorities to ensure price stability, increase business confidence and benefit customers.

“The outlook for decreasing inflation in 2024 will have a profound impact on businesses, providing a more predictable cost environment and potentially leading to lowered policy rates, stimulating investment, fueling growth, and creating job opportunities,” Cardoso said.

Cardoso said that the NESG 2024 Macroeconomic Outlook report shows the need for economic transformation, and its main topic is “Economic Transformation Roadmap: Medium-Term Policy Priorities”.

“This theme underscores the requirement for a clearly outlined roadmap comprising distinct yet interconnected phases and essential policy recommendations.

This resonates with me as we have just last week, launched a new 5-year Strategy for the Central Bank of Nigeria for the period 2024-2028 that provides a clear roadmap for achieving our mandates,” – Cardoso

The NESG report explains that everyone is better off when stock markets are stable. A stable price supports economic growth and employment. It allows people to make more reliable plans for borrowing, saving and growing their business.

“Decreased volatility of the exchange rate helps to support stability in inflation, which mainly affects low-income households because they have fewer resources to protect themselves.

In the situation of price stability, it helps to maintain social cohesion and stability. History has shown that episodes of high inflation tend to be associated with social unrest.” Report.