Ex-CBN Director Calls For Boost In Capital Investments

Ex-CBN Director Calls For Boost In Capital Investments

Dr. Titus Okurounmu, a former Research Director at the Central Bank of Nigeria (CBN), has urged the Federal Government to increase investments in capital projects to foster job creation and economic stability. His comments came in response to the recent decision by the Monetary Policy Committee (MPC) to raise the monetary policy rate (MPR) from 26.25% to 26.75%.

During an interview in Ota, Ogun State, Okurounmu explained that the hike in MPR, which aims to curb inflation, reflects the current inflation rate of approximately 34.19%. He criticized the decision, noting that with the MPR now above the inflation rate, borrowing costs are high, potentially leading to losses for businesses and discouraging investment.

“Massive investment in capital projects is crucial,” Okurounmu stated. “Such investments would not only create jobs but also lower price levels by improving the accessibility of goods and services. This approach is essential for addressing both inflation and the country’s deficit budget.”

He emphasized the importance of shifting focus from recurrent expenditures to capital investments. According to Okurounmu, this strategy would help reduce inflation and address broader issues, including insecurity, by creating employment opportunities.

On Tuesday, CBN Governor Yemi Cardoso announced the MPC’s decision to increase the MPR by 50 basis points. The committee also adjusted the asymmetric corridor around the MPR to +500/-100 basis points and maintained the Cash Reserve Ratio and Liquidity Ratio at 45% and 30%, respectively.

Dr. Okurounmu’s call underscores the need for a balanced approach to fiscal and monetary policies to stimulate economic growth and stability.