…Disburses N499.01bn to 15 interventions in 3 months
By Kayode Tokede
A member of the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN), Professor of Economics, University of Ibadan, Festus Adenikinju has backed the federal government plans to sell off its moribund assets and explore the use of off-budget means to finance infrastructure in the country.
The Minister of Finance, Budget and National Planning, Zainab Ahmed, had said the Federal Government wants to sell some of its assets to fund the 2021 Budget because they are currently moribund and provide little or no value in their current state.
Adenikinju in his personnel statements during the first MPC meeting in 2021 stated that the 2020 Federal governemt budget performance shows that the recent increase in crude oil prices is not reflected in gross government oil revenue.
According to him, “Government gross oil revenues for some months in 2020 were N454.34billion in April, N284billion in May, N254.34billion in September, N201.12billion in October and N225.41billion in November.
“Whereas between April and November 2020, price of Bonny Light rose steadily from $12/b to $43/b respectively.
“This is a worrisome development.”
He said other issues that need to be addressed under the current dispensation of providing support for the economy includes robust oversight on the financial sector.
He maintained that, “The Bank must use all tools necessary to ensure that current forebearance granted to bank customers are not withdrawn prematurely.
“The exchange rate management will continue to be challenging as the deficits in trade account and current account during slowdown in remittances and FPI persist.
“Hence, the Bank must creatively adjust the exchange rate at minimum costs to the economy. There is a need for continuous dialogue between CBN and key stakeholders in the economy like non-oil exporters, to ensure synergy between CBN policies and programmes and the incidence of their implementation.
“Current adjustment in energy prices and liberalization of the downstream petroleum sectors are necessary for long term survival of the energy sectors to enable them play positive roles in economic recovery.”
He added that, “The persistent security challenges are a threat to the economic recovery programmes of government and needs to be addressed urgently.
“There is a need for a coordinated vaccination programme against COVID-19 in the country. Government must get engaged quickly in the acquisition of vaccines for its citizens in 2021. The level of vaccination will have direct impacts on economic recovery.”
Another member of MPC, Associate Professor of Economics, Ahmadu Bello University, Aliyu Sanusi stated that credit to core private sector has grown by 15.35per cent in December 2020 chiefly reflecting the effect of the various CBN’s credit policies as well as the on-going development finance interventions.
He disclosed that, “For instance, between November 2020 and January 2021, a total of N499.01 billion was disbursed under the 15 interventions, including AGSMEIS, TCF, ABP, Manufacturing Sector Stimulus, Electricity Market Stabilization Facility, CBN/BOI Facility, Export Development Facility, etc. These policies have significantly affected interest rate developments.
“Available data shows that Prime Lending and Maximum Lending rates have declined between October 2020 and January 2021.
“In addition, about 62.7per cent of the N8.421 trillion lent by the banking system as at December 2020 was lent at less than 10 per cent rate of interest per annum. As at December 2020, 92.32% of the total amount lent by the banking system was at less than 20per cent interest rate.”
However, the Deputy Governor, Financial System Stability, CBN, Aisha Ahmad who is also a member said the financial system continued to persevere in its resilience, supporting credit to the domestic economy whilst maintaining robust soundness indicators, despite the economic disruption caused by COVID-19.
According to her, Bank staff data indicated that domestic sector credit remained on an upward trajectory (gross credit grew by N4,917.05 billion from N15,567.66 billion at end-May 2019 to N20,484.71 billion as at end-December 2020) with significant increases recorded in manufacturing, agriculture, construction and general commerce – major sectors driving domestic GDP growth.
She added that, “The Loan to Deposit Ratio (LDR) policy has been markedly successful at directing credit to the real economy and should be sustained with a renewed focus on effective utilization, to guarantee expected benefits from supporting businesses, manufacturing capacity and domestic output.”
She expressed that rising prices coupled with negative/low growth is a serious challenge confronting monetary policy in Nigeria and many African countries.
“With low fiscal space to spend out of the recession relative to advanced economies who have significant inflation slack, policy makers in Sub-Saharan Africa face uniquely challenging times,” she said.
The Permanent Secretary, Federal Ministry of Finance Member, Aliyu Ahmed in his personal statement explained that stimulus packages executed by the fiscal authority in 2020 was commendable, calling for its tempo to be sustained, especially through the unalloyed and timely implementation of the Economic Sustainability Plan that embodies a stimulus package of N2.3 trillion.
“Likewise, the monetary authority should continue its strategic and result-oriented sectoral interventions in the economy through regular monitoring and evaluation to identify areas of improvement and consolidation,” he said.