…as MPC meeting holds this week
The Central Bank of Nigeria (CBN) has disclosed that foreign reserves crossed the $45 billion mark last week Thursday, a high recorded since September 2018.
Consequently, the foreign reserves have appreciated by 4.4per cent or $1.89 billion from $43.12 billion it opened in 2019.
The foreign reserves has been on a steady increase since February amidst increase in global oil prices and increased inflow of foreign exchange from diaspora.
The foreign exchange buffer closed February at $42.97 billion but moved to $44.43 billion in March.
The steady increase pushed the foreign reserves to $45.2 billion as at March 21, 2019, a 6.73 per cent increase from $42.35 billion at end-February 2019. In April, the apex bank foreign exchange buffer closed at $44.8 billion.
The Director, Banking Supervision, CBN, Alhaji Ahmad Abdullahi, had said the nation’s economy has developed despite the global and domestic challenges.
According to him, “investors’ outlook and confidence have increased despite challenges. The lending rate in the banking industry has increased and between January and March of this year, we have we have seen as inflow of $6billion into the economy despite election tension.”
The Monetary Policy Committee (MPC) members of the CBN at the last meeting noted with satisfaction, the continued stability in the foreign exchange market at the Investors’ and Exporters’ (I&E) window of the market.
They also observed the moderate improvement in oil prices and stable accretion to foreign reserves.
Meanwhile, the third MPC is taking place this week, starting from May 21- 22.
At the last meeting, the MPC voted to adjust the Monastery Policy Rate (MPR) by 50 basis points from 14 to 13.50 per cent, first time in over two and half years.
The members also retain the asymmetric corridor of +200/-500 basis points around the MPR; retain the Cash Reserve Ratio at 22.5 per cent; and retain the Liquidity Ratio at 30 per cent.
The CBN governor, Mr. Godwin Emefiele at the end of the meeting noted that MPC members noted the constraints imposed on fiscal policy and the associated vulnerabilities as it has consistently failed to mobilize sufficient revenues to support development as enunciated in the ERGP, leaving room for continued debt financing, not previously envisaged.
According to him, “Against this backdrop, it is imperative for monetary policy to provide the much needed leverage to support output growth and employment generation in the country.
“On a more cautious note, the Committee expressed concern and sympathises with the fiscal authorities, over the growing fiscal deficit, external debt and debt service, and urged the need to closely monitor the public procurement process in order to improve efficiency in public resource management.
“On financial system stability, the MPC noted the improvements in key financial soundness indicators and commended the Federal Government for the settlement of debt owed to oil marketers, which has considerably, helped in reducing the non-performing loans (NPLs) portfolio of the banking industry.
In his communiqué, he said, “The Committee, therefore, urged the Government to expedite action in settling all outstanding contractor-related arrears so as to improve the NPLs position and stabilise the banking system. In addition, the MPC reiterated the Bank’s commitment to improve credit delivery, especially to small and medium scale enterprises, while acknowledging efforts by the CBN in coordinating the de-risking of lending to the private sector through the collaboration between the Bankers’ Committee and NIRSAL.
“In its consideration of the best monetary policy option, the Committee noted the need for all agencies of Government to work hard, not only in consolidating the growth so far achieved, but also in ensuring that appropriate policies are put in place and implemented to create jobs on a mass scale and diversify the economy in a proper direction.
“In doing this, the policy options facing the MPC at this meeting is a decision between retention of the current stance of monetary policy or a slight loosening of the policy rate, backed by the substantial stability of the major macroeconomic indicators.
“The Committee felt that given the relative stability in the key macroeconomic variables, there is the need to signal a new direction that is pro-growth.
“In its arguments, the Committee was convinced that doing this would further uphold the Bank’s commitment to promoting strong growth by way of encouraging credit flow to the productive sectors of the economy.
“The MPC felt that signalling through loosening by a marginal reduction would serve to manage the sentiments in the capital markets owing to the wider spread in yields in the EMDEs, relative to the advanced economies. Moreover, the real interest rate in the country would still remain positive.”