The Central Bank of Nigeria (CBN) Tuesday issued a rejoinder to a recent press release by the Nigerian Economic Summit Group (NESG), attacking some of the policy measures taken by the regulator in response to the coronavirus pandemic.
In a press release posted on the apex bank’s website on Tuesday, titled ‘Re: Matters of Urgent Attention,’ and signed by its Director of Corporate Communications, Isaac Okorafor,’ the CBN noted that its development finance activities right from the pandemic outbreak were targeted at steadying the economy and support government’s moves to revitalise economic activities.
The NESG had earlier requested President Muhammadu Buhari to withhold assent to the repealed and re-enacted Bank and Other Financial Institutions (BOFIA) Act 2020, passed by the national assembly not long ago, which it said contained some provisions that violated the constitution and bestowed immunity on the CBN governor.
The CBN said the impact of the coronavirus crisis on countries around the world triggered a significant downtrend in the Nigerian economy, compelling them to impose lockdown measures in a bid to contain the pandemic spread.
It noted that this prompted depressed economic activities and lower productivity in the first half of the year.
“It is therefore pertinent to state that the Nigerian economy is not immune from these crises given the over 65 per cent drop in commodity prices; disruptions in global supply chains and the unprecedented outflow of over $100bn of debt and equity funds from emerging markets between March and May 2020; in addition to the impact of the lockdown on economic activities.
“These activities resulted in an over 60 per cent reduction in revenues due to the Federation Account, a significant drop in foreign currency inflows, which led to downward adjustments in the naira/dollar exchange rate and a rise in inflation due to the exchange rate pass through effect of imported inflation,” the CBN said.
It stressed that interventions taken by the bank were aimed at preventing the economic crisis from spiralling into a full-blown financial crisis.
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According to the regulator, some of such measures include a year moratorium on principal repayments for CBN intervention facilities, shoring up the loan-to-deposit-ratio policy, creation of a N50 billion target credit facility for households and businesses severely affected by COVID-19 through NIRSAL Microfinance Bank among others.
“Analysts expected GDP growth to decline by 7.4 per cent but the impact of the measures by the monetary and fiscal authorities helped to reduce this decline to 6.1 per cent.
“This decline was less severe than the decline experienced in other economies such as the United States, South Africa, and India which saw significant declines in growth by 32 per cent, 52 per cent and 23 per cent respectively.
“We do expect that with the phase-out of the lockdown measures, GDP growth in the third quarter will be much better than that of the second quarter, due to the impact of the measures being implemented by the monetary and fiscal authorities.
“CBN also feels compelled to let Nigerians know that in spite of the cordial and open relations between both organisations, NESG could have raised its allegations directly with us but never did,” the statement said.