$79 oil price benchmark will increase inflation - CBN

AS the National Assembly finally fixed the 2013 budget oil price benchmark at $79 per barrel, the Central Bank of Nigeria (CBN) has insisted that the benchmark will increase the already high inflation rate in the country.

In the 2012 national budget, the oil price benchmark was fixed at $75 per barrel while the current inflation rate stands at 12.24 per cent.

Addressing the media shortly after the 87th Monetary Policy Committee (MPC) meeting at the apex bank headquarter on Monday, in Abuja, the CBN Governor, Mallam Sanusi Lamido Sanusi, stated that the $79 per barrel oil price benchmark was too high for an economy that was experiencing double digit inflation, adding that it would only aggravate the already high inflation.

Sanusi, who stated that the MPC meeting was convened to review the performance of the Nigerian economy in the 2012 fiscal year and chart the way forward for the economy in 2013 disclosed that the sub-Saharan Africa recorded robust economic growth in 2012 as the country Gross Domestic Product growth stood at 7.45 per cent against the 6.61 per cent recorded in 2012.

The governor stated that the MPC particularly lauded the accretion in external reserves which stood at $44.8billion as at January 16, 2013 as against $43.84billion of December 31, 2012.

With the positive development in the external sector of the Nigerian economy as a result of increased earnings from sale of crude oil and gas and proceeds from the wholesale Dutch Auction System, Mallam Sanusi said the external reserves would finance at last nine months of imports.

Notwithstanding the increased earnings from the oil sector, the apex bank boss stated that the MPC expressed concern over low level of investment in the oil sector.

To ensure the development of the oil sector, the CBN Governor said the MPC advised the Federal Government to fast track the speedy passage of the Petroleum Industry Bill with a view to attracting the much desired investment in the sector.