MPC holds its fire – Calls on the fiscal team to increase buffers
The MPC, at its penultimate meeting last week, voted unanimously to maintain status quo on all monetary policy parameters. This was premised on the need to fully ascertain the impact of the implementation of the minimum lending threshold of 60% in boosting credit to the private sector. Credit to the private sector grew by 9.36% in August.
The committee however called on the Government to increase fiscal buffers by disposing redundant public assets through an efficient, effective and transparent privatization process. This will boost government revenue and resuscitate the redundant assets to generate employment and contribute effectively to national economic growth.
CBN’s cashless policy – A double-edged sword
In a bid to reduce money in circulation and encourage the use of electronic payment platforms, the CBN has introduced a new charge of 2% and 3% on cash deposits in excess of N500,000 for individuals and N3,000,000 for corporate respectively. This is expected to increase the velocity of money and enhance efficiency in the payment system. It will also widen the tax net and increase government revenue. However, it is likely to lead to structural unemployment as cash handlers are displaced.
The informal sector is central to LPG adoption in Nigeria
The government has set a 40% target for LPG adoption in Nigeria. Deepening domestic use of LPG is desirable for the economy given its positive effect on health and the environment. To achieve this target, the informal retail outlets remain a strategic component.
In this edition of the FDC Bi-Monthly publication, the FDC Think-Tank analyzes these issues and their implications on businesses and the economy at large.
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