…Retains Interest Rate At 11.5%
…To Revamp Commodity Exchange
…Injects N554.63bn into Anchor Borrowers programme
The Monetary Policy Committee, MPC, of the Central Bank of Nigeria, CBN, has expressed concern over the rising public debt stock and predicted that there will be future debt servicing challenges for the country in the near future.
According to the committee, which ended its two-day meeting on Tuesday, the country’s recurrent expenditure remained relatively high, compared with capital expenditure.
While giving details of the meeting at a press conference, the CBN Governor, Godwin Emefiele, advised that the government revenue sources and investment in capital should be improved.
The committee called on the government to take advantage of the take-off of the African Continental Free Trade Area (AfCFTA), which could boost domestic production and generate sizeable revenues for government, as well as improve domestic productivity and competitiveness.
According to the committee, available data and forecasts for key macroeconomic variables for the Nigerian economy suggest an improvement in output growth in the first quarter of 2021.
This, it said, would be supported by the coordinated and sustained interventions of the monetary and fiscal authorities, including the broad-based stimulus and liquidity injections.
MPC Retains Interest Rate At 11.5%
The MPC retained the Monetary Policy Rate at 11.5 per cent and retained the Cash Reserve Ratio and Liquidity Ratio at 27.5 per cent and 30 per cent, respectively.
The committee retained the asymmetric corridor of +100/-700 basis points around the MPR.
The committee urged the government not to consider a lockdown of the economy in order not to reverse the gains of the stimulus earlier provided in 2020
While expressing understanding of the public health dilemma of the recent spike in infections, also encouraged the Central Bank of Nigeria Management to intensify its efforts in the targeted credit facility to household, SMEs, health, agriculture and manufacturing sectors.
The committee said there was a need to continue to explore avenues to improve inflow from sources such as the International Money Transfer Operators (IMTO), diaspora 11 classified as confidential remittances and non-oil export promotion, given the current trajectory of crude oil prices.
These sources, in the view of the committee, would boost foreign exchange supply and ease the current exchange rate pressure.
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While responding to questions, the CBN governor also said the apex bank was working to attract between $10bn to $15bn diaspora remittances annually, adding that any international money transfer operator subverting the process would be sanctioned.
He insisted that local importers who stash forex abroad and deny the country of the much-needed forex resources would be blacklisted.
“We will no longer allow importers to keep their dollars abroad after they make profits,” he said.
Emefiele said the CBN would likely suspend interest rates on interventions again for another 12 months if the second-wave COVID-19 rides on.
CBN To Revamp Commodity Exchange
Speaking on rising commodities prices, he said private commodities exchanges had not helped the economy, thus, he said the Nigerian Commodity Exchange must be revamped.
He said the CBN has written and obtained the permission of the president to restructure the Commodity Exchange in Nigeria.
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According to him, the intervention of the CBN will ensure that food prices in the country are stable going forward.
“We will execute the Commodity Exchange to stabilise food prices. CBN has 60 percent controlling stakes in the Nigeria Commodities Market,” he added.
CBN injects N554.63bn into Anchor Borrowers programme
The CBN Governor also revealed that over N500bn has been injected into the economy via the Anchor Borrowers programme (ABP).
The communique issued at the end of the meeting stated, “Under the Bank’s real sector interventions, under the Anchor Borrowers Programme (ABP), N554.63 billion had been disbursed to 2,849,490 beneficiaries since the inception of the programme, of which N61.02 billion was allocated to 359,370 dry season farmers.
“In light of the on-going synchronized efforts by the monetary and fiscal authorities to mitigate the impact of the COVID-19 pandemic, the Bank has committed substantial amount of money towards this objective.”
The CBN disclosed that about N2. 9 billion of the Creative Industry Initiative Fund has been disbursed among operators in the fashion, music and Information, Communication Technology and the movie industries.
According to the CBN boss, the various funds have been impactful and have helped to moderate the impact of the COVID-19 pandemic in the country.
The CBN governor said that the various funds disbursements would be done in such a way that all regions of the country would benefit from the interventions.
