The Monetary Policy Committee (MPC) of Central Bank of Nigeria has reduced Monetary Policy Rate (MPR), to 12.5 per cent.
The MPR is the instrument used by the Central Bank of Nigeria through the MPC to control interest/ lending rates
This is the second MPC meeting in a row that will be held under COVID-19 protocols. While delivering the communique, CBN Governor, Godwin Emefiele said other monetary policy parameters remained unchanged.
Emefiele, said the MPC resolved to retain the Liquidity Ratio at 30 per cent, Cash Reserve Requirement (CRR) at 27.5 per cent and the asymmetric corridor at +200/-500 basis points around the MPR.
A few weeks back Asiwaju Bola Ahmed Tinubu had called on the CBN to reduce interest rates so that investors and manufacturers can access fund at a cheaper rate.
Emefiele also hinted that Nigeria may escape another recession if determined efforts are made to boost domestic production and export, saying, “this is the most potent time to diversify our economy. We must follow through our policies on diversification and there’s no better time than now. Over 40 countries have banned export of goods from their countries.
To the bank’s efforts to save Nigeria from recession, Emefiele revealed that “under the N100 billion healthcare intervention fund, the bank has approved and disbursed N10.15 billion for some projects for the establishment of advanced health centers and the expansion of some pharmaceutical plants to make essential drugs and intravenous fluids.”
He added that “from the N1 trillion intervention targeted at the agric and manufacturing firms, the bank has disbursed N93.2 billion under the real sector support fund to boost local manufacturing and production across critical sectors. It consists of over 44 greenfields and brownfield projects. The bank has also approved N10.9 billion to 14,331 beneficiaries.”
With regards to the N50 billion Targeted Credit Facility (TCF), for households and SMEs Emefiele stated that N4.1 billion has been disbursed to 5,868 successful applicants.”
The MPC he said has reached out to banks to help facilitate the disbursement of those loans to priority sectors of the economy so as to stimulate aggregate demands and create more jobs.
Another strategy for avoiding recession Emefiele said will be to urgently come up with better tax collection measures to help diversifying the economic base of the country.
He lamented that the COVID-19 pestilence, which started as a health challenge in 2019 escalated into “a global economic crisis that disrupted the global supply and other catastrophes that vandalized economies across the world.”
With regards to rice export, the CBN Governor was optimistic that President Muhammadu Buhari’s decision to stop the importation of rice into the country and support local production was a right decision.
This is because “rice exporting nations have halted export as local demands have risen to 70% because they’re running out of stock. They didn’t farm due to COVID-19. Same thing with those exporting drugs”, he said.
The CBN Governor said the apex bank stopped selling forex to Bureau De Change (BDCs) “as a strategy to curb the nefarious activities of some of them. if people say they want forex to travel and there is a travel ban, it means some people got naira somewhere and want to buy dollars and keep for themselves”, he said.
He however disclosed that forex sales to Bureau De Change (BDCs), would resume so.
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