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Clarity on economic policy anticipated after polls

2015-03-25 12:07

Lagos - Analysts have projected the result of this weekend's general elections to have an impact on policies the Central Bank of Nigeria will adopt to steer the economy.

Nigeria, the continent's biggest economy and its most populous country, is preparing for polls that are seen as the most crucial since the return to civilian rule in 1999.

"We believe the outcome of the presidential elections will guide policy making in 2Q15. Subsiding political and market tensions will allow for a normalisation in trade and possibly fresh portfolio inflows as investors seek out favourable re-entry levels," Rand Merchant Bank stated on Wednesday.

The think-tank said this was premised on a clear foreign exchange policy which would essentially allow market forces to determine the value of the naira.

Also Read: Jonathan promises additional state for South-East

The local currency has been on a freefall in recent months because of waning demand for oil internationally.

On Tuesday, the CBN monetary policy committee voted to retain the benchmark interest rate as well as the liquidity and cash reserve ratios at prevailing levels at its March sitting.

It asserted that the current monetary policy stance remains supportive of economic growth and the pursuit of price stability.

"We did not anticipate a change in the CBN’s tack merely days before the presidential election," RMB stated.

However, an analysts said sustained exchange rate weakness, a food supply shortage on account of the security challenges in the North, low base effects and unplanned pre-electoral spending could occasion double-digit inflation by year-end, compelling the CBN to "act".

- CAJ News
Read more on: economy  |  politics  |  2015 election

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