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CBN seeks improved monetary, fiscal coordination to tackle macroeconomic challenges

By BusinessNews Staff on December 2, 2014

The Deputy Governor, Economic Policy, the Central Bank of Nigeria (CBN) Dr. Sarah Alade, has said achieving macroeconomic growth and stability require enhanced coordination between monetary and fiscal policy instruments.

She said emerging challenges including low fiscal buffers, expansionary fiscal policy, high volume of maturing instruments and impact of external shocks as well as dwindling foreign exchange earnings, declining reserves, weak oil-all made it imperative for the monetary and fiscal authorities to improve coordination around their activities.

Speaking in Abuja at the opening of the Fiscal Liquidity Assessment
Committee retreat, she noted that these challenges had all redefined the boundaries of macroeconomic management thereby necessitating the need to redress mutual suspicion and hostility experienced globally between the two macroeconomic management institutions.

Expounding the theme: “Can Monetary or Fiscal Policy Alone Achieve Macroeconomic Stability and Growth?,” the CBN. Deputy Governor said: “At the moment, the economy faces significant downside risks of reversal in capital flows, reserve depletion, depreciation of Naira, financial market instability and higher inflation and we cannot afford not to understand ourselves and work together.

“In the next couple of months, political activities would peak. anticipated level of injection would require enormous effort to manage domestic excess liquidity to reduce inflationary pressure”

She said: “Against this background, FLAC members at this workshop are enjoined to appreciate the importance of their individual and collective roles in confronting the enormous challenges that lie ahead.

“It is my hope that this year’s retreat will offer participants the opportunity to evaluate the recent challenges confronting monetary and fiscal policies and to build the trust required in sharing information, which will be key to strategising for the growth and stability of our economy in the days ahead.”

However, Director, Monetary Policy Department, CBN, Mr. Moses Tule said emphasised the need to sustain macroeconomic stability through effective and efficient domestic policies adding that the emerging scenario had provided strong motivation for the committee to strengthen coordination between monetary and fiscal policies.

[ThisDay]

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