Inflation rate will decline further to 13.8 per cent – FDC

An economists has projected that the nation’s infl ation rate will declined further to 13.
8 per cent within the year. Managing Director Financial Derivatives Company Limited, Bismarck Rewane who made this projection at LBS Breakfast session said it is expected to have increase in government spending this year.
He said that the nation’s currency expected to remain at the range of N362 – N363 to a dollar band, adding that the stability will be supported by Central Bank of Nigeria interventions. He explained that though weighted average exchange rate now stood at N340 to Dollar there would be likely demand pressures in the system.
Reviewing the forex market, he said total forex intervention by the CBN was $1.305 billion in March, this year against $1.04 billion recorded the same period in 2017. The analysis showed that in thevmonth of March o SME: $165 million allocated to SMEs, $165 million went to Invisibles while Wholesale and Retail SMIS received $300 million and : $675.32 million respectively.
He explained that the Naira volatility was 98.6 per cent lower in first quarter of 2018 than first quarter 2017, indicating that confi dence in the currency is much higher today despite lower dollar.
Rewane who was optimistic that the foreign reserves would continue its upward trend with support from oil proceeds said that gross external reserves increased by 8.3 per cent in March to $46.04 billion against an increase of 4.4 per cent recorded in February this year.
He said that the Central Bank of Nigeria is targeting reserves of $54 billion before year end.
He further said that possible acceleration of the Fed’s tightening plan may mean even sharper reversal of capital fl ows and currency pressures in Nigeria, adding that stronger dollar as a result of interest rate hikes will impact commodity prices negatively and dampen Nigeria’s oil revenue while some US and Chinese producers may lower prices of some exports to stay competitive On the Sub Sahara Africa (SSA) growth in debt , he said In 2005, rich lenders forgave “heavily indebted poor countries” and 30 of them were in Africa.
He pointed out that many of these countries turned their fortunes around with better policies and sound management, stressing that Median debt level in SSA fell to 30 per cent of Gross Domestic Products by 2012 This according to him has grown to over 50 per cent today – low by international standards but distressing because of their relatively low tax collection and high interest rates He said that Lower commodity prices have hurt revenues and economic growth in the region and Governments have had to borrow to fi ll the gap left by lower commodity prices He however said that sudden spending cuts could result in half-finished infrastructure projects and this could potentially heighten the debt debacle by tipping economies into recession.
He said according to IMF Five SSA countries already in “debt distress”; nine more teetering on the edge.
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On the way forward, he said efficiency in tax collection is paramount, adding that business I the country still need to recover from recession.
He said that the effect of increased tax revenue should trickle down to tax payers .