Our Interventions To Promote Economic Growth Will Continue: CBN to IMF
The Central Bank of Nigeria says it will continue to intervene in development finance to support the growth of the economy.
The CBN Governor, Godwin Emefiele disclosed this while reading the communiqué of the first Monetary Policy Committee meeting in Abuja.
Emefiele was responding to remarks by the IMF in its latest Article IV report on Nigeria where it advised the CBN to scale back its credit intervention programmes as they are likely to cause market distortion in the long run.
Also Read: CBN Retains Monetary Policy Rate At 11.5 Percent
The Apex bank governor said: “The truth is that the IMF has been a great supporter as well as adviser to the CBN as well as Nigeria. It is important that we underscore the support that we have always received from the IMF.
“In 2020, as a result of COVID, the IMF opened its vault to all countries from for the Rapid Credit Facility (RCF) facility loan and Nigeria got the highest in Africa of almost $3.4 billion. It aided us in resolving some of our problems, particularly in the period of COVID.
“In 2021, when they saw the third wave, they came up to say, they were increasing the special drawing right and we benefit to the tune of above $3billion.
“But in terms of advice, we reiterate the fact that the CBN remains a development finance-oriented central bank and it is normal for an emerging market, a developing economy to deploy the development finance tools through intervention to support the growth of the economy.
“I think it is just reasonable that the CBN steps in to support the fiscal to fill that space not through grants but through loans to smallholder farmers, SMEIS and to wake up our manufacturing industries who are dead.”
Emefiele argued that the IMF will agree that the over N300billion disbursed to over one million homes helped to catalyse consumption expenditure that has helped Nigeria to return positive in GDP even though GDP is still fragile.
“IMF knows that even our intervention to manufacturing is helping and we have facts to show so.”
The Monetary Policy Committee has voted to hold all monetary parameters constant, maintaining the benchmark interest rate at 11.5% despite increasing inflationary pressures in the country.
After its second meeting of the year, the committee voted to maintain the Monetary Policy Rate (MPR) at 11.50 percent, with the asymmetrical range of +100/-700 basis points around the MPR remaining unchanged.
The Cash Reserve Ration (CRR) was retained at 27.5% while the Liquidity Ratio was also kept at 30%.
The Central Bank while commenting on its outlook for the global economy, the Governor, Godwin Emefiele suggested that inflation is expected to be on the rise, due to the continuous rise in energy prices and could only be contained if the Russia-Ukraine war can be addressed as soon as possible.
However, the MPC on a majority vote voted to keep rates stable, believing tightening interest rates now would be counter-productive to the nation’s economy as a result of the global economic recession caused by the Ukraine-Russia dispute.
