The Central Bank of Nigeria recently released the May 2009 Economic Report. The summary and copy of the report are below:

Provisional data indicated decline in monetary aggregates in May 2009. Broad money supply (M2) fell by 3.1 per cent over the level in April 2009, while narrow money supply (M1) declined by 5.4 per cent. The contraction in M2 was attributed wholly to the fall in net foreign assets and other assets (net) of the banking system.
Available data indicated mixed developments in banks’ deposit and lending rates. The spread between the weighted average deposit and maximum lending rates narrowed from 12.76 percentage points in April 2009 to 12.23.

The margin between the average savings deposit and maximum lending rates, also, narrowed from 20.17 percentage points in April to 19.89. The weighted average inter-bank call rate, which stood at 12.51 per cent in the preceding month, rose to 13.17 per cent at end-May 2009, reflecting the liquidity condition in the banking system. The value of money market assets outstanding increased by 1.7 per cent to =N=2,999.5 billion over the level in April 2009. The rise was attributed to the 3.0 per cent increase in outstanding FGN bonds.

Activities on the Nigerian Stock Exchange were slightly bullish as al the major market indicators trended upwards in the review month. The major agricultural activities in the review month included: harvesting of tree crops; clearing of land for the 2009 cropping season; and the preparation of irrigated land for cultivation.

In the livestock sub-sector, farmers continued to re-stock broilers and layers to replenish sales during the festive season. Nigeria’s crude oil production, including condensates and natural gas liquids, was estimated at 1.70 million barrels per day (mbd) or 52.70 million barrels for the month, compared with 1.71 mbd or 51.30 million barrels in April 2009. Crude oil export was estimated at 1.25 mbd or 38.75 million barrels for the month, while deliveries to the refineries for domestic consumption remained at 0.445 mbd or 13.80 million barrels. The average price of Nigeria’s reference crude, the Bonny Light (370 API), estimated at US$60.02
per barrel, rose by 17.3 per cent over the level in the preceding month.

The inflation rate for May 2009, on a year-on-year basis, was 13.2 per cent, compared with 13.3 per cent in the preceding month. The inflation rate on a twelve-month moving average basis was, however, 13.8 per cent, compared with 13.5 per cent in the preceding month. Foreign exchange inflow and outflow through the Central Bank of Nigeria (CBN) amounted to US$2.04 billion and US$3.36 billion, respectively, resulting in a net outflow of US$1.32 billion in May 2009.

Relative to the respective levels in the preceding month, inflow and outflow rose by 0.7 and 16.5 per cent, respectively. The rise in inflow was attributed to the increase in crude oil receipts, while the increase in outflow was due largely to the rise in drawings on L/Cs as well as RDAS utilisation.

Foreign exchange sales by the Central Bank of Nigeria (CBN) to end-users through the authorized dealers stood at US$3.11 billion, indicating an increase of 18.7 per cent over the level in the preceding month, while demand increased by 12.3 per cent to US$4.10 billion. The weighted average exchange rate of the Naira vis-à-vis the US dollar, depreciated by 0.4 per cent to =N=147.84 per dollar at the RDAS. In the bureau-de-change segment of the market, the rate also, depreciated by 0.2 per cent to =N=180.63 per dollar.

Other major international economic developments of relevance to the domestic economy during the review month included: the 24th Meeting of the Convergence Council of
Ministers and Governors of the West African Monetary Zone (WAMZ) held in Abuja, Nigeria on May 23, 2009. The meeting was preceded by the 21st Meeting of the Committee of Governors of Central Banks of the WAMZ. The Convergence Council noted that the December 1, 2009 deadline for the commencement of the WAMZ Monetary Union was not feasible and approved that the new dateline for the Union be on or before January 1, 2015. Also, the ECOWAS Convergence Council, comprising Ministers of Finance and the Governors of Central Banks of member states held an Extraordinary Meeting on May 25, 2009. The Convergence Council approved a revised road map for the realisation of a single currency for West Africa by 2020.

The roadmap outlined activities to be undertaken ahead of the new date, including the review and harmonisation of the convergence criteria, the harmonisation of statistics, domestic policies and the legal, accounting and statistical frameworks of public finance. In another development, the Association of African Central Banks Continental Seminar on Liquidity Management was held in Abuja from May 7 – 9, 2009. The seminar had three sub-themes namely: What Concept of Liquidity
for African Economies; Suitable Liquidity Management and Forecasting Tools for Africa; and Collaboration among African Central Banks in Liquidity Management in
the Context of the International Financial Crisis.

Lastly, the 153rd Extraordinary Meeting of the Conference of the Organization of the Petroleum Exporting Countries (OPEC) was convened in Vienna, Austria in the review month. The Conference considered the report of the Ministerial Monitoring Sub-Committee and reviewed the oil market situation, as well as the demand and supply projections for 2009, particularly the third and fourth quarters. It observed that the severe and broad impact of the ongoing global economic downturn, precipitated by the financial crisis, had led to a weakness in global oil demand, which was likely to remain for some time.