COVID-19: CBN Moves to Protect Economy From Shock
…Reduces Interest Rate from 9% to 5%
…Extends One Year Moratorium for Intervention Facilities
Following the significant adverse consequences of the outbreak of Coronavirus on the Nigerian economy, the Central Bank of Nigeria(CBN) has reduced interest rate from 9 percent to 5% per annum for one year on all applicable CBN intervention facilities effective March 1, 2020.
The CBN Governor, Mr Godwin Emefiele stated this while briefing the media on the current positions taken by the apex bank on the country’s economy from the shock occasioned by the pandemic.
He also announced an extension of further moratorium on all CBN intervention facilities for one year on all principal repayments, effective March 1, 2020. This means that any intervention loan currently under moratorium are hereby granted additional period of one year.
“Accordingly, participating financial institutions are hereby directed to provide new amortization schedules for all beneficiaries”.
He said the outbreak of Coronavirus has led to unprecedented disruptions in global supply chains, sharp reduction in crude oil prices, turmoil in global stock and financial markets, massive cancellations in sporting, entertainment and business events, lockdown of large swaths of movements of persons in many countries, and intercontinental travel restrictions across critical air routes in the world.
According to him, these outcomes have had serious adverse implications for key sectors including but not limited to oil and gas, airlines, manufacturing, trade and consumer markets.
He said the apex bank in furtherance of its financial stability mandate is committed to providing support for affected households, businesses, institutions, and other stakeholders in order to cushion the adverse economic impact of this pandemic.
Other interventions announced by the CBN boss include the creation of a N50 billion credit facility through NIRSAL Microfinance Bank for households and small- and medium-sized enterprises (SMES) that have been particularly hard hit by Covid-19, including but not limited to hoteliers, airline service providers, health care merchants, etc.
On it support for healthcare, Mr Emefiele further said the apex bank has opened its intervention facilities, loans to Pharmaceutical companies intending to expand/open their drug manufacturing plants in Nigeria, as well as to Hospital and Healthcare practitioners who intend to expand/build the Health facilities to first class centres.
According to him, the development is in addition to growing the size of existing interventions to the Agricultural and Manufacturing sectors in Nigeria.
The CBN has also granted all Deposit Money Banks leave to consider temporary and time-limited restructuring of the tenor and loan terms for businesses and households most affected by the outbreak of Covid-19 particularly Oil & Gas, Agriculture, and manufacturing.
He said the apex bank would work closely with DMBs to ensure that the use of this forbearance is targeted, transparent and temporary, whilst maintaining individual DMB’s financial strength and overall financial stability of the system.
He said “In view of the success of the LDR Policy in growing credit to the economy and reducing interest rates, the CBN would further support industry funding levels to maintain DMBs capacity to direct credit to individuals, households, and businesses. We will also consider additional incentives to encourage extension of longer tenured credit facilities. DMBs are encouraged to continue to build capital buffers in order to improve resilience of the sector”.
He posited that the Bank stands ready to provide liquidity backstops as and when required in view of its role as Banker to the Federal Government and lender of last resort, adding that it will continue to monitor developments and will issue further updates as may be appropriate.