The Central Bank of Nigeria (CBN) has forecast a significant decline in inflation and exchange rates in 2024, assuring that despite the prevailing challenges, the outlook for the domestic economy remains notably positive in the coming year.
The CBN governor, Olayemi Cardoso, gave these forecasts on Thursday when he appeared before the National Assembly Joint Committee on Banking, Insurance, and other Financial Institutions.
“Despite short-term inflationary pressures, we anticipate a decline in inflation rates by 2024,” Cardoso said.
“Similarly, we expect a substantial reduction in exchange rate pressures, fostering a more stabilized foreign exchange market,” he said.
The CBN governor elaborated on the recent unification of exchange rate windows in June 2023, emphasizing its pivotal role in reshaping the management of exchange rates.
This move, according to him, is aimed at curtailing arbitrage, rent-seeking behaviour, and speculative activities in the market, fostering a system where foreign exchange rates are determined by demand and supply dynamics.
He also gave key trade statistics, disclosing that total trade in the third quarter of 2023 amounted to N18.804 billion. Exports accounted for N10.346 billion, while imports stood at N8.457 billion, indicating a positive trade balance that is anticipated to bolster external reserves.
He, however, cautioned that due to domestic factors, the revenue generated from oil exports in 2024 is expected to decrease.
“We anticipate reduced revenues from oil exports due to production constraints, despite the OPEC-approved quota for Nigeria being higher than our assumed production limit in the 2024 budget,” Cardoso said.
He outlined factors contributing to the under-performance of oil production targets to include crude oil theft, pipeline vandalism, production shutdowns, and divestments by major oil companies.
Before Cardoso’s presentation, Chairman of the joint committee, Senator Tokunbo Abiru (APC, Lagos East), highlighted that the interactive session was in accordance with statutory requirements, ensuring transparency and compliance with existing laws.
The Co-Chairman of the committee, Hon. Bahir Bello El-Rufai, commended the efforts of the CBN governor and the entire management team, acknowledging the measures undertaken to stabilize the nation’s economy.
The CBN’s optimistic outlook for 2024, tempered by challenges in the oil sector, aims to guide fiscal policies toward ensuring economic stability in Nigeria.
