Banking Sector - The looming economic crisis rocking Nigeria due to the fall in the price of crude oil in the international market which is the mainstay of the Nigerian economy, may persist longer, says economic expert.
Amid a worsening business environment, Deposit Money Banks (DMBs) may, "commence massive staff retrenchment in Q2 2016", Managing Director, Financial Derivatives Company Limited (FDC), Mr. Bismarck Rewane, has predicted.
The influential economist, who made this forecast in his firm’s projection for 2016, also stated that State governments will retrench a significant number of workers in the first quarter of this year.
He, however, predicted that, "There will be massive civil works and construction (of roads, bridges, railways) in 2016 (and) oil prices will recover to $55pb by Q2’2016." Rewane further forecast that, the benchmark interest rate-the Monetary Policy Rate (MPR)- will be reduced to 10per cent per annum while the Cash Reserve Ratio (CRR) to 15per cent."
According to him, "Accommodative monetary policy- lower interest rate and increase liquidity -and expansionary fiscal policy- bailout payment and N6trillion proposed budget will reflate the economy."
Other predictions made by the FDC boss include that, "Inflation will spike to 11per cent in Q1'2016 before falling to 9per cent in Q3'2016; official rate of the Naira will depreciate to N220/$ (and) parallel market rate will appreciate to N235/$."
Industry sources said that although 2015 was tough, banks are bracing for an even more difficult 2016.