Godwin Emefiele, CBN Governor


As the number of coronavirus (Covid-19) cases continues to surge in the country, the Monetary Policy Committee (MPC) of the Central bank of Nigeria (CBN) has stated on Tuesday that the pandemic will undermine any monetary or fiscal stimulus unless appropriate measures are taken to trace, test, isolate and treat infected persons in order to curtail the spread.

At the end of its two-day meeting in Abuja, the Committee in a communiqué read by its chairman and CBN Governor, Mr Godwin Emefiele, charged the government to reduce movement across the country in order to curtail the spread of the disease.

The MPC retained all benchmark rates- Monetary Policy Rate (MPR) at 13.5 per cent; asymmetric corridor of +200/-500 basis points around the MPR; Cash Reserve Ratio (CRR) at 27.5 per cent and  Liquidity Ratio at 30 per cent.

“The Committee urged Federal Government to take the necessary steps to safeguard the population through close monitoring and emergency readiness measures to identify and care for infected persons in the country,” it noted.

It believed the COVID-19 pandemic will result in massive economic crises that will force many countries into recession, including the leading industrialised countries.

“The MPC took into cognisance the impact of the decline in oil prices on accretion to external reserves and the emergence of exchange rate pressures. The Committee thus commended and endorsed the “Management of the Bank for its prompt response with the adjustment of the exchange rate to uniform market rates and the removal of distortions.
“It, however, took note of the likely impact of the exchange rate adjustment on the economy. The Committee noted the weakened revenue position of the Federal Government, arising from the sharp drop in oil prices,” it submitted.

It called on the National Assembly to fully cooperate with the Federal Government in coming up with a budget that reflects new realities, saying the reduction of pump price of PMS from N145 to N125 per litre by the Federal Government will boost aggregate demand, lower inflation and improve the welfare of Nigerians.

The Committee encouraged the government to leverage on Public Private Partnership (PPP) to intensify investment in infrastructure to increase output and employment, due to the persistence of inflationary pressures attributed to a combination of monetary and structural factors.

“The Committee cited the potentials for Foreign Direct Investment (FDI) flows to the Nigerian auto manufacturing, aviation and rail industries, which could take advantage of these viable and untapped domestic and regional markets.

“The Committee noted the sustained improvement in the financial soundness indicators, applauding the continued decline in the ratio of non-performing loans, growth in assets of the banking system and profitability of the industry in the light of increasing global uncertainties. It also recognised the success of the Bank’s loan-to-deposit ratio policy and its potential to alleviate production shortfalls, reduce unemployment and boost aggregate demand, urging the Bank to pursue this and other related policies to a conclusive end,” it added.