The Monetary Policy Committee of the Central Bank of Nigeria on Tuesday called on the Federal Government to urgently evaluate the level of its domestic indebtedness and develop a framework for settling these debts.

The committee, in a communique issued at the end of its two-day meeting held at the headquarters of the CBN in Abuja, warned that the huge government indebtedness to economic agents had slowed down business activities.

In the communique, which was read by the CBN Governor, Mr. Godwin Emefiele, the committee noted that the development was not good for the economy as it was compromising the integrity of the financial system.

While reiterating that monetary policy alone could not address the current economic crisis, the CBN governor noted that the committee called for an enrichment of fiscal and other sector initiatives and interventions towards resolving the growth challenges in the economy.

He said these interventions were vital in order to promptly revive confidence in the economy.

Emefiele said, “Members stressed the need for a robust and more keenly coordinated macroeconomic policy framework that would restart output growth, stimulate aggregate demand and rein in inflation expectations.

“The MPC urged the Federal Government to urgently assess the extent of its indebtedness to domestic economic agents and develop a framework for securitising the debts in order to settle its outstanding domestic contractual obligations, which cut across all sectors of the economy.

“These accumulated debts have slowed the business activities of economic agents, most of who are indebted to the banking system, thus compromising the integrity of the financial system. It also advised the bank (CBN) to commit to greater surveillance and deployment of early warning systems in managing the banking system.”

The CBN governor said the committee called on security agencies to sustain their checks on the activities of illegal foreign exchange operators in order to bring sanity to that segment of the market.

He said, “The extant foreign exchange regulation outlaws the trafficking of currency on the streets as some unlicensed operators currently do.

“Thus, to evolve an appropriate naira exchange rate that stabilises the foreign exchange market, Bureau De Change operators must strictly observe the terms and conditions of their licences.”

On whether the CBN was supporting jail terms for people hoarding dollars, Emefiele said the apex bank would not support any such move.

He said while the current foreign exchange regulations of the CBN did not in any way support jail term for people who hoard dollars, he was aware that the Nigerian Law Reform Commission was working towards reviewing the regulations.

The apex bank boss, however, added that the CBN would not support any move to prescribe jail terms for people who hoard dollars.

He said, “Let me use this opportunity to reiterate that it is not in our foreign exchange regulations that people should be jailed or their dollars confiscated. But I am aware because just today (Tuesday), I was told that the Nigerian Law Reform Commission is looking at reviewing the exchange regulations, just like it normally will from time to time depending on the exigency of the time.

“We have not been contacted regarding whether or not some of the clauses that are involved are included in the review to be conducted by the Law Reform Commission.

“But I am saying here categorically that if we are contacted, or whenever it becomes an issue for discussion, we will advise against a clause that forbids people from keeping their dollars if they chose to, or a law that says people should be jailed for keeping foreign currencies.”

When asked if the apex bank was concerned about some of the risks facing the banking system owing to the current economic crisis, the CBN governor admitted that while all players in the financial system were facing “tremendous risks,” the central bank would ensure that they would not crystalise to a point where depositors’ funds would be lost.

He said, “As a result of the current challenges being faced by the global economy, all agents in the financial system, such as banks and other players, are facing tremendous risks.

“When there is a slowdown or recession, naturally banks will face certain risks such as non-performing loans rising and different other risks, and this imposes on the regulator a greater challenge to ensure that it strengthens its prudential guidelines to ensure that the banks and particularly depositors are protected.

“Nigerian banks, like other banks in other climes, are facing risks. But those risks are surmountable, and the central bank is doing all its best to ensure those risks don’t crystalise to a point where we will begin to talk about depositors losing their deposits. So for that reason, the rumour about banking sector risks is overtly elevated.”

On whether the apex bank was considering reducing the number of BDC operators so as to better regulate their activities, the governor said the CBN might consider that option at the appropriate time.

He said, “We believe that everybody (BDC) is entitled (to have a licence) once the regulations are set; there is no need to preclude you if you meet the conditions. But of course, naturally, the regulator, which is the CBN, has a right to put in place policies that limit entry. If we want to limit entry, we know what to do.

“I can assure you we will do it anytime we decide to limit entry or even exacerbate exit from the market, and that is something we will look into at the appropriate time.”

On the foreign exchange inflow through the CBN, the governor said the country recorded a decline of $447.5m or 31.85 per cent from $1.4bn in September to $957.37m in October.

He attributed the decrease to lower crude oil and other government revenues in the period under review, lamenting that despite the resumed Joint Venture payments in October, the total outflows also continued to decrease.

Foreign exchange outflows, according to him, dropped significantly by 58.68 per cent from $2.25bn to $1.01bn during the period.

Emefiele said the committee implored the CBN to continue to direct more focus at making foreign exchange available to the agriculture and manufacturing sectors of the economy.

This, according to him, can be achieved by enforcing its policy directing Deposit Money Banks to allocate 60 per cent of the available foreign exchange to these sectors.

On the Monetary Policy Rate, the CBN governor said the committee decided to leave it unchanged at 14 per cent.

He explained that all the 10 members who attended the MPC meeting agreed to maintain the current monetary policy stance.

Apart from the MPR that was retained at 14 per cent, the governor said the committee also voted to retain the Cash Reserves Ratio at 22.5 per cent.

Also retained were the liquidity ratio, which was left at 30 per cent; and the asymmetric window, which was left at +200 and -500 basis points around the MPR.



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http://www.infonancialhub.com/fgs-huge-debts-crippling-financial-system-cbn/

Na waa o

Emefiele too is tired of this govt. This is what yall voted for though, we must enjoy it together

We keep going in circles

I do not pray for my children to be in dis mess oo,lawd observe me biko

Nd buhari want to borrow another money again are we moving forward

my people its a serious matter, what is the hope for our generation?

Hmm.

Wahala

New day, new stories. Which way Nigeria?





GET RID OF STRETCH MARKS, CHECK MY SIGNATURE!

Osunization in progress

list of those to be punished specially by God
1. APC and associates
2. PDP and associates
3. CBN and associates


feel free to add urs

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And Buhari the Gworo chewing illiterate Dullard a.k.a AJALA ONI GBESE still wants collect more loan[/size]

So they can't manage the present debt but still want to go for another $29 billion debt. The present Govt is really inefficient.

Day before yesterday, twas Dr. Junaid, yesterday twas former President Olusegun Obasanjo, today it's the CBN governor himself an appointee of the government..

When something keeps on repeating a particular thing, it calls for serious scrutiny on our parts

It's high time the federal government make a scrutiny of its actions and inactions to know where it's not doing right in order to retrace it's footsteps

basilo102:
Osunization in progress

In other words, we will be Aregberascalized I'd care isn't taken..

And FG wants to borrow more with no plans for proper investment

fayose can borrow us

And yet Our Ajala is planning to borrow yet another $30 billion to permanently confine Nigeria to a wheel chair. Pls why was this man crying to rule at all costs when he knows absolutely nothing about governance? And yet some insane people still tell u he is up-to somethin, give him time. Lawd help us ooo

Government of borrow borrow

Buhari has nothing to offer. It is foolish to think otherwise.

So what would 29.9 do to us then?

The committee, in a communique issued at the end of its two-day meeting held at the headquarters of the CBN in Abuja, warned that the huge government indebtedness to economic agents had slowed down business activities

Did he mean to say activities of the efcc, the exits of multinationals, or the fact that oyeh is their focus, especially exploration in the north?

Lord have Mercy

Meanwhile, the FG planned to borrow more to further sink the country. Even though he borrowed to implement 2016 budget, there's nothing to show for it. The money he retrieved from corrupt pple, nothing to show for it, Abacha's loot, nothing to show for it. Is someone swallowing those money ni?

Why wont it?

Now y'all shoud listen up, I neither supported nor voted Change, Buhari should in matter of urgency take back his change and give me the transformation I voted.

And they are contemplating on getting some more uhn!

Buhari needs to sack Emefiele and redeploys Udoma from Budget Ministry. If both continue to drive our monetary and fiscal policies, things can only get worse not better.