Home Business No plan to convert $20 b in Dom. Acc. to Naira- Emefiele

No plan to convert $20 b in Dom. Acc. to Naira- Emefiele

by Business News Report

Governor Central Bank of Nigeria Mr. Godwin Emefiele said that there were no plans to convert the $20 billion held by Nigerians in domiciliary accounts to Naira. He said “For the avoidance of doubt, the bank will continue to allow domiciliary account holders unfettered access to the funds in their accounts.  I need to seize this opportunity to explain that these funds are not idle as have been wrongly reported.  Those funds on the balance sheet are funding assets on the other side of the balance sheet,” he said.

Mr. Emefiele urged a speedy passage of the 2016 federal government budget in order to halt the depressing effects of the uncertainty that engulfed the waiting period, knowing that the implementation of the budget will go a long way in boosting business confidence and re-invigorating the financial market.

According to him, the fiscal challenge facing the nation was not peculiar, as according to him, all other oil exporting nations were in similar situation. His words, “We have been meeting with the fiscal authorities and we have been discussing the direction  of the economy and the challenges that face us at this time especially, realizing fully well that this challenge is not peculiar to Nigerian and this is a challenges that confronts practically all economies in the world, whether you are a commodity exporting country or not.”

On Deposit Money banks’ refusal to lend to the private sector, the governor said that there has been rising cases of Non-Performing Loans and that the apex bank was in discussion with the DMBs with a view to working out strategies that would give rise to increased lending without undue risks exposure among the banks.

In a bid to tighten money supply in response to the sharp increase in inflation in February, the CBN raised its Monetary Policy Rate (MPR) to 12 percent from 11 percent.

The Bank also increased the portion of customers’ deposits that banks must keep as cash, known as the Cash reserve ratio, to 22.5 percent from 20 percent, while it retained the liquidity ratio (LR) at 30 percent.

Mr. Godwin Emefiele, announced these decisions at the end of the Monetary Policy Committee (MPC) meeting. He said that the decision to tighten money supply was because the balance of risk was against inflation. The inflation rate rose to 11.38 percent from 9.6 percent in December. Emefiele said that while the sharp rise in inflation was caused by structural factors like scarcity of petrol, rise in electricity tariff and exchange rate pass through, the MPC worried by huge excess liquidity in the banking industry. He added that the MPC noted that the excess liquidity is driving speculation for foreign exchange and also feeding into prices of goods and services.

He added that the Committee is also concerned that the spike in inflation could  discourage local and foreign investors from investing in the country.





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