Rising from the January Monetary Policy Committee (MPC) meeting, the Central Bank of Nigeria (CBN) has retained the benchmark interest rate at 11.5 per cent.
The CBN Governor, Mr. Godwin Emefiele who briefed journalists after the MPC meeting ended, said the federal government has stimulated the economy with N8.8 trillion interventions comprising $18 billion (about N6.82tr) and another N2tr economic interventions in about one year.
The interest rate was however sustained as the recession persists. Just like in November 2020, CBN also retained the asymmetric corridor of +100/-700 basis points around the Monetary Policy Rate (MPR). It also retained the Cash Reserve Ratio (CRR) at 27.5 per cent, and retained the liquidity ratio at 30 per cent.
Reacting to a recent Fitch’s report that suggested CBN spent too much to support the federal government during this pandemic, Emefiele said the interventions were within international best practice as most global economies did the same to help reflate their economies as the negative impact of COVID-19 lockdown bite.
He said the $18bn is just about 4.5 per cent of Nigeria’s Gross Domestic Product (GDP) compared to other economies that did much more.
“The effort of CBN isn’t different from what has been done in other economies. We’ve deployed both conventional and unconventional measures to foster faster economic growth,” Emefiele noted.
He also said the apex bank will extend the grace of payment of interest on its various intervention loans by one year.
On rising food prices, he said the CBN response will be to restructure Nigeria Commodity Exchange.
“We have written and gotten the approval of the President to restructure the exchange. It will operate as a standard commodity exchange found anywhere in the world to stabilize food prices. The CBN controls 60 per cent of the Nigeria Commodity Exchange and we will restructure it,” he explained.
The CBN head also warned that importers who stash foreign exchange (forex) abroad and deny the country of the much needed forex resources will be blacklisted.
“We will no longer allow importers to keep their dollars abroad after they make profits,” said Emefiele.
Daily Trust got comments from experts on the MPC decisions. According to the Managing Director of Cowry Asset Management, Johnson Chukwu, lauded CBN on the systematic synchronization of policies which would be for both monetary policies and physical policies.
On the extension of loan payment moratorium to March 2022, Chukwu said: “Well, I think the major beneficiary will be those who have accessed the intervention funds. Remember that is not going to lead to additional injection into the economy. So we will not have an immediate impact on consumption or output improvement.
“The aspect I am also waiting to hear from the CBN governor is on the moratorium granted to banks to grant moratorium of one year to their debtors. It should expire on the first of March 2021. Without a situation of that moratorium, you will likely see a material increase in nonperforming loans,” he noted.
Professor of Capital Market, Uche Uwaleke, however lauded the MPC for maintaining the status quo and holding the rates in a bid to strike a balance between enabling output growth and curbing rising inflation.
“By doing so, the CBN will have some more time to monitor macroeconomic response to all its interventions in the wake of COVID-19 pandemic. So, in my view, the MPC did not disappoint. Their unanimous decision is consistent with market consensus and expectations,” Uwaleke said.