The Monetary Policy Committee of the Central Bank of Nigeria on Tuesday
called on the Federal Government to urgently evaluate the level of its
domestic indebtedness and develop a framework for settling these debts.
the end of its two-day meeting held at the headquarters of the CBN in
Abuja, warned that the huge government indebtedness to economic agents
had slowed down business activities.
In the communique, which was read the
CBN Governor, Mr. Godwin Emefiele, the committee noted that the
development was not good for the economy as it was compromising the
integrity of the financial system.
alone could not address the current economic crisis, the CBN governor
noted that the committee called for an enrichment of fiscal and other
sector initiatives and interventions towards resolving the growth
challenges in the economy.
need for a robust and more keenly coordinated macroeconomic policy
framework that would restart output growth, stimulate aggregate demand
and rein in inflation expectations.
urgently assess the extent of its indebtedness to domestic economic
agents and develop a framework for securitising the debts in order to
settle its outstanding domestic contractual obligations, which cut
across all sectors of the economy.
business activities of economic agents, most of who are indebted to the
banking system, thus compromising the integrity of the financial
system. It also advised the bank (CBN) to commit to greater surveillance
and deployment of early warning systems in managing the banking
called on security agencies to sustain their checks on the activities of
illegal foreign exchange operators in order to bring sanity to that
segment of the market.
regulation outlaws the trafficking of currency on the streets as some
unlicensed operators currently do.
exchange rate that stabilises the foreign exchange market, Bureau De
Change operators must strictly observe the terms and conditions of their
terms for people hoarding dollars, Emefiele said the apex bank would not
support any such move.
exchange regulations of the CBN did not in any way support jail term for
people who hoard dollars, he was aware that the Nigerian Law Reform
Commission was working towards reviewing the regulations.
reiterate that it is not in our foreign exchange regulations that
people should be jailed or their dollars confiscated. But I am aware
because just today (Tuesday), I was told that the Nigerian Law Reform
Commission is looking at reviewing the exchange regulations, just like
it normally will from time to time depending on the exigency of the
whether or not some of the clauses that are involved are included in the
review to be conducted the Law Reform Commission.
if we are contacted, or whenever it becomes an issue for discussion, we
will advise against a clause that forbids people from keeping their
dollars if they chose to, or a law that says people should be jailed for
keeping foreign currencies.”
concerned about some of the risks facing the banking system owing to the
current economic crisis, the CBN governor admitted that while all
players in the financial system were facing “tremendous risks,” the
central bank would ensure that they would not crystalise to a point
where depositors’ funds would be lost.
challenges being faced the global economy, all agents in the
financial system, such as banks and other players, are facing tremendous
naturally banks will face certain risks such as non-performing loans
rising and different other risks, and this imposes on the regulator a
greater challenge to ensure that it strengthens its prudential
guidelines to ensure that the banks and particularly depositors are
other climes, are facing risks. But those risks are surmountable, and
the central bank is doing all its best to ensure those risks don’t
crystalise to a point where we will begin to talk about depositors
losing their deposits. So for that reason, the rumour about banking
sector risks is overtly elevated.”
reducing the number of BDC operators so as to better regulate their
activities, the governor said the CBN might consider that option at the
(BDC) is entitled (to have a licence) once the regulations are set;
there is no need to preclude you if you meet the conditions. But of
course, naturally, the regulator, which is the CBN, has a right to put
in place policies that limit entry. If we want to limit entry, we know
what to do.
we decide to limit entry or even exacerbate exit from the market, and
that is something we will look into at the appropriate time.”
the CBN, the governor said the country recorded a decline of $447.5m or
31.85 per cent from $1.4bn in September to $957.37m in October.
crude oil and other government revenues in the period under review,
lamenting that despite the resumed Joint Venture payments in October,
the total outflows also continued to decrease.
CBN to continue to direct more focus at making foreign exchange
available to the agriculture and manufacturing sectors of the economy.
enforcing its policy directing Deposit Money Banks to allocate 60 per
cent of the available foreign exchange to these sectors.
14 per cent, the governor said the committee also voted to retain the
Cash Reserves Ratio at 22.5 per cent.
which was left at 30 per cent; and the asymmetric window, which was left
at +200 and -500 basis points around the MPR.(punch)