There will be no devaluation of the naira, Central Bank of Nigeria (CBN) Governor Godwin Emefiele reiterated
He told reporters in Abuja after the Monetary Policy Committee (MPC) meeting that the apex bank is “already working on different scenarios. The models are being worked on and we will look at them as much as possible and we will continue to discuss at management levels and we will try as much as possible to continue to share our thoughts with the fiscal authorities with the view to harmonising the positions to ensure that notwithstanding the drop in crude prices, we are able to continue to run the government and continue to do business.”
The MPC meets bimonthly to shape the country’s monetary policies.
Yesterday’s meeting also urged the federal government to coordinate its borrowings with the CBN.
It also retained all its earlier monetary tools to regulate interest rate
Emefiele, who announced that the country’s external reserves stand at $28bilion, said: “The Committee stressed the need for the fiscal authorities to compliment the Bank’s low interest rate policy orientation by properly coordinating its borrowing activities (and rates) with the CBN in order to push the common objective of stimulating banking system credit delivery at low interest rates to the key sectors of the Nigerian economy.
“It noted that given the current economic reality of dwindling oil revenue and the rather unclear outlook for commodity prices, there would be need for a recalibration of the fiscal strategy to increasingly explore opportunities in non-oil tax revenue.”
The Committee acknowledged the continuous liquidity surfeit in the system stemming partly from the recent growth-stimulating monetary policy measures and the tendency of the banks to invest excess reserves in government securities, rather than extend credit to the needed sectors of the economy.
The Committee “urged the deposit money banks to improve lending to the real sector, as part of their patriotic obligations to the country and enjoined the management of the CBN to continue to explore ways of incentivising lending to employment- and growth-generating sectors, particularly the SMEs.”
Emefiele said the CBN ”cannot regulate interest rate, we cannot force them; all we can do is to put in place policies that will enable them to do what we want. We can continue to incentivise them also by putting in place policies that will encourage them to do this.
“This is a free market; we cannot really compel them as is expected. Until banks decide to work with the CBN, those funds sitting in the CBN vault will not be made available to them.”
While the objective of stabilising the financial system in the aftermath of the Treasury Single Account (TSA) withdrawals and J. P. Morgan delisting of Nigeria have been largely achieved, Emefiele stated that “the goal of increasing lending to key sectors of the economy is yet to be achieved”.
The Committee voted to retain the Monetary Policy Rate (MPR), Cash Reserve Requirement (CRR), Liquidity Ratio (LR) and the asymmetric corridor of +2/-7 around the MPR. In summary, “the MPC voted to retain the CRR at 20.0 per cent; MPR at 11.0 per cent; Liquidity Ratio at 30 per cent; the asymmetric corridor at +200 basis points and -700 basis points.”
Emefiele said Bureau De Change (BDC) market “is not a very important market. As far as we are concerned, it is insignificant in terms of volume which is about 5-10%, it is high time we all realized and agreed that government cannot continue to provide foreign exchange to support the need of that market.