Dr. Olayemi Cardoso, the Governor of the Central Bank of Nigeria (CBN), has indicated that there may be a decrease in petroleum product prices throughout 2024, which is expected to have a positive impact on the country’s economy. Dr. Cardoso made this statement during the unveiling of the Nigerian Economic Summit Group’s (NESG) 2024 Macroeconomic Outlook on January 24, 2024, in Lagos.
The CBN Governor’s announcement regarding the potential reduction in fuel costs comes at a time when Nigerians are optimistic due to the recent completion and testing of the mechanical rehabilitation phase of the Port Harcourt Oil Refinery Complex in Rivers State, as well as the subsequent activation of petroleum product production at the Dangote Petroleum Refinery in Lagos.
Dr. Cardoso emphasized that the expected stabilization or decrease in pump prices of Premium Motor Spirit (PMS), commonly known as petrol, would play a crucial role in the economic equation. He stated, “The anticipated moderation in fuel costs is poised to have significant implications across various sectors, contributing to overall economic efficiency and resilience.”
Furthermore, the Governor highlighted that inflationary pressures are expected to decline in 2024 as a result of the CBN’s inflation-targeting policy, which aims to bring inflation down to 21.4 percent. These developments will be supported by improved agricultural productivity and the alleviation of global supply chain pressures, benefiting businesses by boosting consumer confidence and purchasing power.
Dr. Cardoso outlined the CBN’s approach to achieve price stability through the adoption of the inflation-targeting framework, emphasizing clear communication, the use of monetary policy instruments, and collaboration with fiscal authorities. This strategy is expected to provide businesses with a more predictable cost environment, potentially leading to lower policy rates, increased investment, economic growth, and job creation. The CBN has also returned to a conventional monetary policy approach, focusing on attaining price stability to foster sustainable economic growth in Nigeria.
Regarding the CBN’s initiatives in the foreign exchange market, Dr. Cardoso stated that the collaboration between the CBN, the Federal Ministry of Finance, and the Nigerian National Petroleum Company Limited (NNPCL) to ensure the return of all foreign exchange inflows to the Central Bank is yielding positive results. This coordinated effort is expected to enhance the Bank’s foreign exchange flows and contribute to reserve accretion.
The Governor attributed the expected stability in the foreign exchange market for 2024 to the reduction in petroleum product imports and the recent implementation of a market-determined exchange rate policy by the CBN. This reform aims to streamline and unify multiple exchange rates, promoting transparency and reducing opportunities for arbitrage.
Dr. Cardoso further elaborated, stating, “The resulting consistent and stable exchange rate will not only boost investor confidence but also attract foreign investment, thereby increasing Nigeria’s appeal to global investors. We are implementing a comprehensive strategy to improve liquidity in our foreign exchange markets in the short, medium, and long term, focusing on addressing fundamental issues that have hindered the effective operation of our markets over the years.”