CBN Moves to Ensure Fiscal, Monetary Policy Coordination
Determined to ensure proactive policy coordination of both the fiscal and monetary operations in the country, the Central Bank of Nigeria (CBN) has for the first time invited state governments to participate in its annual retreat for the monetary and fiscal authorities in the country.
Speaking at the opening ceremony of the third annual Fiscal and Liquidity Assessment Committee (FLAC) workshop on Thursday, October 29, 2015, the Governor, Mr. Godwin Emefiele, described the gathering as a very important platform for information sharing critical to successful coordination of fiscal and monetary policy towards achieving the overall macroeconomic objective of the Government.
Mr. Emefiele, who was represented by the Deputy Governor, Economic Policy, Dr. (Mrs.) Sarah Alade, noted how dwindling revenues in the country created budget funding gap for all tiers of government. According to him, a combination of innovative and conventional methods or even other sources of funding were required, that may impact the balance sheet size of the Bank.
He therefore stressed the need for closer collaboration between the fiscal and monetary authorities to intensify efforts in examining and deploying an array of tools available at their disposal that would ensure optimal execution of government budget through maximum revenue generation and minimum cost of budget implementation.
The Governor added that the essence of the workshop was to synergise ideas on how best to tackle the challenges associated with the declining revenue from both fiscal and monetary perspective in order to actualise government’s objectives. Earlier in a welcome address, the Director, Monetary Policy Department, Mr. Moses Tule, said FLAC was a strategic committee of the Bank, which provides a platform for the fiscal and monetary authorities to interact for the purpose of articulating complementary policy decisions.
Mr. Tule recalled that FLAC was a result of collaboration between the International Monetary Fund (IMF) and the CBN in 2007, as a way of improving monetary and fiscal authority collaboration. He therefore urged participants to engage one another and evolve a coordinated approach to the use of various instruments at the disposal of each authority for achieving the macroeconomic goals.
The two-day retreat with the theme: “Dwindling Government Revenue: Implications and Priorities for Fiscal and Monetary Policy Coordination in Nigeria,” featured presentations from subject-matter experts from both fiscal and monetary authority perspectives. Some of the presentations included: “Dwindling Oil Revenue: New Challenges for Sustainable Economic Growth in Nigeria” by Babatunde Fowler, Chairman of the Federal Inland Revenue Service (FIRS); and “Oil Price Crash: Imperatives of Coordinated Federal and States’ Fiscal Policy,” presented by Alhaji Ahmed Idris, Accountant General of the Federation.
Mr. Orji Uche, Managing Director and Chief Executive Officer of the Nigeria Sovereign Investment Authority (NSIA), made a presentation entitled, “Excess Crude Account, Sovereign Wealth Fund and Sustainable Economic Growth in Nigeria,” while the paper titled, “Monetary Policy with Low Fiscal Buffers: The Case of Nigeria,” was delivered by Mr. Moses Tule. The Director, Financial Markets Department of the CBN, Mr. Emmanuel Ukeje, also delivered a paper on “Managing Liquidity in a revenue dwindling Economy”.
The participants were drawn from across the states of the federation, including permanent secretaries, directors in the respective States’ Ministries of Finance, Planning, Budget as well as State Chief Accountants.