No Sleep Lost Over Drop In Nigeria’s Reserves –Emefiele

Emefiele
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Central Bank of Nigeria (CBN) Governor, Mr Godwin Emefiele on Tuesday, said the reduction in the nation’s foreign reserves from $47 billion to about $40 billion should not put anyone on panic mode as the apex bank was making the right investments with the development. His advice came as the Monetary Policy Committee (MPC) of the apex  bank retained its key anchor rate, Monetary Policy Rate(MPR) at 13.5 per cent.

Emefiele, at a post-MPC briefing, explained that the committee unanimously voted to retain the MPR, after the rate was reduced from 14 percent to 13.5 percent in March 2019, the first time the MPR dropped since July 2016.

Commenting on the impact of the closure of Nigeria’s land borders on domestic food prices, the CBN boss said the Committee noted that any upward price movement arising from the closure was reactionary and therefore temporary.

“Moreover, significant investment has been made over the last three years to sustainably increase domestic food supply. It noted some of the key initiatives in this direction to include: the Commodity Development Initiatives, designed to finance the agricultural value chain of 10 commodities namely; cassava, cocoa, cotton, rice, tomato, poultry, livestock and dairy, fish, oil palm and maize, which has received N171.66 billion in funding.

“Four of these crops received over N140.12 billion or 81.6 per cent of total disbursements (Cassava, N11.44 billion; Cotton, N40.47 billion; rice, N53.40 billion; oil palm, N34.81 billion naira). It is therefore expected that the outcome of these interventions will close the supply gaps already envisaged in the medium to long term, including dampening domestic prices. It thus expressed support for the temporal closure of Nigeria’s land borders, noting that securing the land borders should be further enhanced.

On the impact of the bank’s recent policy on loan-to-deposit ratio, Emefiele said an increase in absolute gross credit, amounting to N1,169.70 billion, was recorded between end-May and end-October 2019.

“Consequently, the manufacturing sector received N459.69 billion, the highest in two decades. This was followed by consumer loans of N356.65 billion, general commerce (N142.98 billion), Information and Communications (N82.07 billion), Construction (N74.52 billion), Agriculture, Forestry and Fishing (N73.20 billion), Mining and Quarrying (N3.64 billion) and Transportation and Storage (N3.09 billion), amongst others. The Committee, therefore, urged the management of the bank to sustain its current efforts to improve lending to the private sector and to explore other initiatives to provide funding to other critical sectors of the Nigerian economy”.

The MPC also noted the improved resilience of the banking system, as the Non-Performing Loans (NPLs) ratio declined further to 6.56 per cent at end-October 2019 from 6.67 per cent at end-September 2019 and from 14.05 per cent in October 2018. The Committee, however, noted that this figure remained above the prudential benchmark of 5.0 per cent, and urged the CBN  to sustain its current efforts, which have created this exorable prudential regime.

As a key pillar of economic diversification, Emefiele said the MPC directed the attention of the fiscal authority to the immense potential of the gas sub-sector and the urgency to encourage horizontal integration through private sector participation. This, the Committee argued will improve domestic power supply and export earnings.

 

THISDAY

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