Breaking News

“Recession Is Looming” – CBN Warns

Airtel Nigeria Call services
Social sharing

The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has urged the Federal Government to faithfully commence implementation of the 2018 budget to avert danger of the economy sliding back to recession, even as it kept its main interest rate at 14 per cent yesterday.
This came just as CBN Governor, Mr. Godwin Emefiele, said he was optimistic the apex bank would resolve a dispute linked to allegations that South African telecommunications firm, MTN, moved funds out of the country illegally.
The CBN policy think tank, whose split decision reflected the bank’s need to contend with both sluggish growth and accelerating inflation, said three of the 10 members of the MPC who met voted to tighten by 25 basis points.
The rate has been at a record high 14 per cent since July 2016.
Nigeria emerged from its first recession in 25 years in 2017, but continues to suffer from sluggish growth and high inflation.
Emefiele said the MPC left Cash Reserves Ratio (CRR) at 22.5 per cent; liquidity at 30 per cent and Asymmetric corridor at +200 and -500 basis points around the MPR.
“There is need to maintain the current monetary policy stance and await a clearer understanding of the quantum and timing of liquidity injections into the economy before deciding on possible adjustments,” Emefiele said.
Commenting on underpinning developments that informed its decision, he said: “The committee appraised the macro-economic environment and noted that at its July meeting, modest stability has been achieved in key indicators, including inflation, exchange rate and reserves.

“In particular, relative stability has returned to the foreign exchange market, going by a robust level of external reserves with inflation trending downward for the 18th consecutive month.”
However, the governor said these gains so far achieved appear to be under threat of reversal following the new data, which provides evidence of weakening fundamentals.

The governor said MPC listed measures, which include implementing capital component of 2018 budget, implementing provisions contained in Economic Recovery and Growth Plan (ERGP) that government could take to sustain economic growth.
“In this regard, the committee urged government to take advantage of the current rising trend in the oil prices to rebuild fiscal buffers, strengthen government finances in the medium term and reverse the current trend of decline in output growth.
“MPC also called on the fiscal authority to intensify the implementation of ERGP to stimulate economic activities, bridge the output gap and create employment,” he said.

Emefiele said the committee expressed concern on rising inflation, which he said could rise in the wake of electioneering spending, coupled with distribution from Federation Account Allocation Committee (FAAC).

He said: “The MPC expressed concern over the potential impact of liquidity injection from the election related spending, and increase in FAAC distribution which is rising in tandem with increase in oil receipt.”

Other areas of committee’s concern include rising level of non-performing loans in the banking system, which he said was stressed mainly by exposure to the oil sector, urging the banks to closely monitor and address the situation.
Meanwhile, Emefiele said he was optimistic that CBN would resolve a dispute linked to allegations that MTN moved funds out of the country illegally.

The banking watchdog, last month, ordered MTN and its lenders to bring $8.134 billion back into Nigeria, which CBN alleged the company had sent abroad in breach of foreign exchange regulations.
MTN’s lenders, Standard Chartered, Stanbic IBTC Bank, Citibank and Diamond Bank were also fined in connection to the money transfer.
He confirmed that MTN and the four banks have written to CBN and provided documents on the matter.

“We understand that there was some interpretation in some quarters that, aside from the naira penalty, there was some conclusion that those dollars attributed to have been remitted by these banks on behalf of MTN were indeed the liabilities of the bank,” he said.
“That is why we provided a clarification to the banks when they called us that the liability is that of MTN and not theirs and that CBN was not in any position or in any way going to debit the bank for the dollar because it was not their liability. It’s important to note that this was an investigation that started about two years ago.”

Meanwhile, Emefiele explained the wisdom behind the adoption of a new name – Polaris – for Skyebank, which it handed over to Assets Management Company of Nigeria (AMCON).
He also affirmed that strategic health of Nigerian banking system remains strong and sound, dispelling insinuation of distress.

At a question and answer session at Tuesday’s MPC meeting in Abuja, Emefiele said: “Let me repeat that the strategic health of the Nigerian banking system remains sound. In every chain, there will always be strong point and weak points, but what we will continue to do is to make sure that that chain remains strong in all aspects of it.

“Notwithstanding, as we see areas where there are weaknesses, we will do everything possible to make sure that we keep the chain linked together and that is what we did with Skye Bank.”
He said Polaris Bank was duly registered with the Corporate Affairs Commission (CAC), adding that the new name was part of requirement for a company going through such peculiar situation experienced by the bank.
“The name had to be changed for legal reasons, having got to the point where CBN has invested close to N800 billion in this bank, at some point, it must be seen to be owned by CBN until we find investors that can pay a fair price for the bank. That is the reason why the name had to change from Skye Bank to Polaris Bank,” he said.

UBA Bank
About Wisdom Nwedene 5847 Articles
Wisdom Nwedene is a seasoned investigative reporter. He is currently an editor @9News Nigeria and also a social media strategist, writer, freelancer, motivational speaker. To always get our news update on WhatsApp, call or text 'add me' to 09021514568, 08163097961 or send me message via Facebook : Wisdom Nwedene( Share your story with us: 09021514568( Call & SMS only) Email:

Be the first to comment

Leave a Reply

Your email address will not be published.


%d bloggers like this: