The Central Bank of Nigeria (CBN), yesterday, lowered the Monetary Policy Rate (MPR) by 100 basis points from 12.5 per cent to 11.5 per cent. It, however, retained the Cash Reserve Ratio (CRR) at 27.5 per cent and the Liquidity Ratio at 30 per cent.
CBN Governor Godwin Emefiele said the decisions by the Monetary Policy Committee (MPC) were tasking, as the body had to weigh growth in lowering the rate against checking inflation, which is threatening to push the national economy into stagflation in the next quarter.
He noted that the highest decision-making organ of the apex bank loosened up owing to the advantages the measures hold for the country Emefiele admitted that economic recovery remains uncertain in view of the headwinds associated with the COVID-19 pandemic.
On the domestic economy, he told a news conference that the most populous nation might contend with the adverse effects of the disease in the remaining part of the year.
To support household consumption, the MPC enjoined management to aggressively channel its funding to targeted families, small and medium enterprises (SMEs) and consumer credit by further increasing its lending activities through its NIRSAL Microfinance Bank (NMFB).
The management was also directed to ensure that deposit money banks (DMBs) respond to the reduction in rates by aggressively lowering cost of credit to borrowers.
IN a related development, Professor of Economics at the Olabisi Onabanjo University, Ago-Iwoye, Ogun State, Sheriffdeen Tella, said the MPR reduction showed that CBN was encouraging demand for credit to grow businesses. He observed that the move would impact the economy positively only if the banks align their operations with the policy.
The don implored the regulator to ensure that the financial institutions release enough funds to the real sector to boost production and grow the economy.
Also, Director of the Centre for Economic Policy Analysis and Research (CEPAR), University of Lagos, Professor Ndubisi Nwokoma, said the measures would stimulate production and economic growth.
BESIDES, the Federal Government has begun blocking leakages in revenue-generating agencies following Nigeria’s rising public debts put at N28.63 trillion.
They have been posting dismal financials, prompting government’s borrowings to augment the shortfalls.In 2018, the President Muhammadu Buhari administration accused most of them, including the Nigerian National Petroleum Corporation (NNPC) and the CBN, of withholding no less than N10 trillion.
Only last week, the Fiscal Responsibility Commission (FRC) said N7 trillion was yet to be remitted by some of these parastatals.HOWEVER, in what appears as a wake from slumber, the Federal Government has deployed directors of revenue from the Office of the Accountant General of the Federation (OAGF) to keep a tab on the agencies and check the country’s pervasive borrowings.
During a three-day orientation workshop in Abuja by the OAGF, Secretary to Government of the Federation (SGF), Boss Mustapha directed the agencies to cooperate with the treasury officers.