CBN Governor Anticipates Petrol Price Reduction in 2024, Unveils Positive Economic Outlook

The Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, announced on January 24 at the launch of the Nigerian Economic Summit Group (NESG) 2024 Macroeconomic Outlook Report in Lagos, that the pump prices of Premium Motor Spirit (PMS) petrol are expected to see a reduction this year. Cardoso attributed this to the commencement of operations by both government and private-owned refineries.

In the statement, Cardoso highlighted the potential far-reaching implications of the expected stabilization or reduction in fuel costs, emphasizing its significant contribution to overall economic efficiency and resilience. He mentioned that while the Dangote Refinery has already commenced production, the Port Harcourt Refinery is expected to begin production soon.

Cardoso also addressed the undervaluation of the naira, which currently exchanges around N1,370 to the dollar in the parallel market. He expressed confidence that coordinated measures on the fiscal side, coupled with efforts by the apex bank, the Ministry of Finance, and the NNPC, will expedite genuine price discovery in the near term.

The NESG 2024 Macroeconomic Outlook Report, as summarized by Dr. Olusegun Omisakin, the Chief Economist at NESG, outlined the economic outcomes of achieving a stable and appropriate exchange rate pricing in Nigeria. The report recommended measures such as enhancing market liquidity, reducing administrative restrictions, and ensuring efficient allocation of FX reserves to stabilize the exchange rate.

Cardoso acknowledged the challenges facing the economy but assured that the ongoing bold reforms are aimed at addressing these challenges sustainably. He highlighted positive outcomes, including upgrades in Nigeria's ratings by international agencies and commended the reforms' direction.

The report also touched on various economic aspects, projecting a slight moderation in GDP growth in 2024, despite outperforming expectations in 2023. Cardoso attributed the positive outlook to key reforms, improved crude oil prices, and production, with the oil industry expected to drive economic growth.

In addressing inflationary pressures, Cardoso mentioned the CBN's inflation-targeting policy, which aims to rein in inflation to 21.4 percent in 2024. Improved agricultural productivity and easing global supply chain pressures are expected to contribute to decreasing inflation, benefiting businesses and consumers.

Cardoso also highlighted the expected stability in the foreign exchange market for 2024, crediting it to reduced petroleum product imports and the recent implementation of a market-determined exchange rate policy by the CBN.

The NESG's Macroeconomic Outlook Report emphasized the necessity of economic transformation, resonating with the CBN's newly launched 5-year strategy for 2024-2028. The report stressed the importance of stable exchange rates, supporting economic growth, employment, and fostering social cohesion. It also advised on achieving a minimum revenue-to-GDP ratio of 15 percent and reducing the current high public debt service-to-revenue ratio for economic development and stability initiatives.