CBN Rejects COVID-19 Lockdown, Keeps Interest Rate At 11.5%
Says economy enjoys N8.8trn boost
BY COBHAM NSA, ABUJA – The Monetary Policy Committee (MPC) of the Central Bank of Nigeria says the Nigerian economy will not survive another round of lockdown over COVID-19 pandemic and therefore warned the Federal Government against such sweeping option.
According to the Committee, considering complete economic lockdown as a way of containing the second wave of COVID-19 pandemic will be hugely risky.
Rising from its first MPC meeting in 2021 on Tuesday, CBN Governor Godwin Emefiele cautioned against another countrywide lockdown due to the second wave of the virus, saying such moves can backfire given current pressure on the nation’s economy.
Emefiele said CBN is also focused on partnering fiscal authorities to overhaul the economy through effective policy implementation, even as he clearly sounded a note of restraint that complete lockdown would be “catastrophic on everybody and the economy”.
According to him, the pandemic’s new wave notwithstanding, government must shun the lure of shutting down things because such move would have far-reaching and harmful impacts that may be difficult to manage in the present circumstance.
He however disclosed that the apex bank has so far injected over N8.8 trillion into the economy since COVID-19 broke out in the country early March 2020.
The CBN Governor, who said the Federal Government has accessed about N6.8 trillion credit facility to boost its efforts at containing the deadly virus, added that an extra N2 trillion has also been committed by the apex bank to address the effect of COVID-19.
On efforts at repositioning the economy for greater productivity, Emefiele said the CBN has gotten President Muhammadu Buhari’s approval to restructure the Nigeria Commodity Exchange (NCE) for effective service delivery.
He further stated that the apex Bank cannot sit back and allow dishonest commodity merchants hoard commodities and force the prices of commodities to be high.
Emefiele said with its 60 per cent holding in NCE, the CBN is determined to take charge of running the exchange in line with international best practice in the overall interest of Nigeria’s economic growth and development.
The CBN governor also announced that the MPC members unanimously agreed to keep the Monetary Policy Rate (MPR) at 11.5 per cent with the Cash Reserve Ratio (CRR) at 27.5 per cent.
Similarly, MPC retained the Liquidity Ratio (LR) at 30 per cent and the asymmetric corridor was left at +100 and -700 basis points around the MPR.
Among the cheering news that also came out from the MPC meeting is CBN’s decision to extend by another 12 months the interest rate of five per cent on all its funding interventions.
Emefiele, who acknowledged that extending the interest rate on the intervention funds would inflict some losses on CBN, said such sacrifice should be considered as the apex bank’s contribution to ensure constancy in the interest rates and stimulate consumer spending, especially for interventions targeted at either household, Small and Medium Enterprises (SMEs), Agriculture and health sectors.
However, the Committee charged the CBN to sustain its current drive at improving private sector’s access to credit, while also exploring other matching inventiveness, in partnership with the Federal Government, to improve financing in critical sectors of the economy.
Emefiele said; “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.”
Offering insights on CBN’s funding interventions to curb the raging virus nationwide, the CBN Governor said; “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.
“Indeed, total disbursements as at January 2021 amounted to N2.0 trillion. COVID-19 Targeted Credit Facility (TCF) meant for household and small businesses, wherein we have disbursed N192.64 billion to 426,016 beneficiaries.
“We have also disbursed N106.96 billion to 27,956 beneficiaries under the Agri-Business Small and Medium Enterprises Investment Scheme (AGSMEIS), while in the Health Care Support Intervention Facility, we have disbursed N72.96 billion to 73 project that comprise 26 pharmaceutical projects and 47 Hospitals and Health Care Services Project in the country.”
