As oil price continues to maintain stability at close to $70 per barrel, and the country maintains a stable growth outlook, the chief executive of Afrinvest West Africa Plc, Mr. Ike Chioke has called for structural reforms that would ensure the nation does not have a relapse in the event of another decline in oil income.
Chioke noted that top the reform agenda of the government should be the liberalisation of the downstream petroleum sector, total deregulation of the power sector to enthrone a more cost reflective electricity tariff.
He also called for “governance reforms echoing some of the major themes of much talked about restructuring, infrastructure investing, economic restructuring to aid fiscal viability of sub-nationals and creation of job opportunities for the galloping population.”
Speaking on Afrinvest outlook report for 2018 titled “The Virtuous Cycle…Again”, Ike noted that “happy accidents or providence and others, a result of deliberate government efforts, have aided Nigeria’s exit from the “vicious cycle” of macroeconomic instability and weak capital market returns and ushered in, once again, a “virtuous cycle” of stability in external sector indicators and fiscal balance, declining inflationary pressures, improving growth profile, increasingly accommodative monetary policy and strong capital market returns.
“Yet, despite the oil price tailwind driving asset prices and short-term growth outlook, Nigeria’s recurrent energy crisis, high unemployment rate, fiscal insolvency of sub-national governments, high dependence on oil earnings for fiscal revenue & current account stability as well as several unforced administrative errors by the ruling political class are constant reminders of unresolved structural fault lines” he said.
With the International Monetary Fund and the World Bank having projected economic growth of 2.1 and 2.4 per cents respectively, Chioke expressed optimism on the short term growth outlook of the saying structural reforms would be “necessary to stabilize external account, rebuild external reserves, improve liquidity in the foreign exchange market and achieve lower inflation as well as lower long term interest rates.”
Meanwhile, in spite of the cancellation of the January Monetary Policy Committee (MPC) meeting, he said the CBN is expected to continue utilising its recently favoured Open Market Operation (OMO) strategy – which is more flexible – to achieve the same easing objective without tweaking the Monetary Policy Rate (MPR).
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