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IMF Lists Unpopular Policies CBN Must Reverse - Business - Nairaland

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IMF Lists Unpopular Policies CBN Must Reverse by Blue3k(m): 1:16pm On May 01, 2020
The IMF wants the CBN to end some of its harshest policies including lifting the forex ban on 41 items.

The International Monetary Fund, IMF on Tuesday approved a sum of $3.4 billion via a Rapid Financial Instrument to Nigeria. The loans come at a period when countries across the world are battling with the Covid-19 pandemic and the crash in crude oil prices.

While the loans do not necessarily come with strings, the IMF did reveal in its press release acknowledging that Nigeria was on the path to unifying its exchange rata and moving towards a flexible exchange rate regime. As Nigerians get acquainted with the terms of the deal, the IMF released more reports shedding more light into what the country might expect to happen in the coming weeks and month should they have their way.

One of such policy changes it demands from Nigeria is a change in some of the most loved monetary policies, currently in place under the Godwin Emefiele led central bank. The CBN Governor has often defended his heterodox policies claiming it is expedient if Nigeria were to dislocate itself from its thirst for foreign imports. The IMF may well be on a collision course with the CBN if it wants the CBN to reverse these policies.

CBN Policies IMF wants to be reversed.

Exchange Rate Unification: The CBN currently maintains a multiple exchange rate regime where it buys and sells forex through several windows. The IMF wants the CBN to collapse these windows into one.

“With the spread across the various exchange rate windows now very narrow, this is also a good moment to immediately move to full and formal unification—e.g., by converging all foreign exchange windows to the I&E window. This critical step to ensuring a well-functioning market would be helped by the CBN’s calibration of its foreign exchange sales in the market at a level commensurate with protecting central bank reserves while taking into account low international oil prices and reduced FX demand. A unified and more flexible exchange rate will be an important shock absorber, especially in turbulent times— with CBN FX interventions limited to smoothing large fluctuations in the exchange rate.” IMF 


The CBN already moved towards this after it devalued from N305 to N360 in its official window. However, the rate still differs from that of the BDCs and the I&E window. CBN also does not have a flexible exchange rate and have resisted this for years under Emefiele. This will be one of the greatest ever policy changes in Nigeria’s economic history and goes against every defense President Buhari has put forward defending a fixed exchange rate regime. It will be a huge victory for more market-friendly analysts if this happens under Emefiele and Buhari.

Remove FX Restriction on Imports: The IMF also wants the CBN to remove all FX related restrictions on imports. This includes its flagship ban on the sale of forex to import on 41 items, a major policy thrust of Emefiele.

“Along with exchange rate unification, existing FX restrictions on goods imports should be removed and monetary policy tightening through more orthodox tools (i.e., no discretionary CRR that distorts banks’ liquidity management) resumed to enable the CBN to reach its single-digit inflation target.” IMF


Dropping this policy will be a very difficult one considering how critical it is to the CBN’s import substitution policy. Once it does this, it would have done a complete 360 degrees to one of its most controversial policies. The CBN believes these bans have led to an increase in the local production of rice and a boost to the agricultural sector.

Stop the CRR & LDR policy: Banks hate the CBN’s increase in CRR and the CBN’s frequent unilateral debits of its deposits due to non-compliance of the load to deposit ration monetary policy. The IMF seems to hate that too.

“Recent regulations to spur lending through the loan-to-deposit ratio, which encourages higher credit risk and a shorter maturity structure, should be eliminated. Banks’ own capital and liquidity buffers should remain the first line of defense, which in the case of Nigeria means that supervisors could temporarily allow banks to drop below the minimum capital requirement (currently 15 percent for large banks, which is significantly above the Basel II 8 percent requirement).” IMF


The CBN’s CRR & LDR policy is at the heart of the bank’s quest to push banks away from the safety of treasury bills and OMO towards the more risky private sector lending. Some naysayers believe the CBN has an ulterior motive which probably includes defending the naira. Getting the CBN to also reverse this policy will be a huge win for banks who have complained that the policy affects its profitability growth.

It will be interesting to see how the CBN reacts to these demands from the IMF and how quickly it could reverse its much-maligned policies if it does agree to reverse them.

Source: https://nairametrics.com/2020/04/30/imf-list-unpopular-policies-cbn-must-reverse/

5 Likes

Re: IMF Lists Unpopular Policies CBN Must Reverse by rottennaija(m): 1:20pm On May 01, 2020
Abeg make IMF rear matter na? Na wetin? We have been a puppet of the west for so long practicing their voodoo economic policies and how has that benefited us?

Abeg, make we practice China model small and see if it will be of good use to use. Especially now that China is investing massively in Africa.

54 Likes 7 Shares

Re: IMF Lists Unpopular Policies CBN Must Reverse by Blue3k(m): 1:33pm On May 01, 2020
These changes would be great but they wont do it. Buhari's economic policies have proven to be failures. Nigeria consistently had low growth and high rates of unemployment every quarter. The central bank policy was contradictory on its face. You want strong currency that encourages imports. Then you ban goods arbitrarily because you save forex to create jobs.

Lol people will foolishly argue the IMF is turning them into slaves like they forced them take money. Everyone knows the IMF is the lend of last resort. If the country fixed it's economy itself you wouldn't be running cap in hand.

40 Likes 8 Shares

Re: IMF Lists Unpopular Policies CBN Must Reverse by helinues: 1:34pm On May 01, 2020
As if IMF truly cares., undecided undecided

40 Likes 6 Shares

Re: IMF Lists Unpopular Policies CBN Must Reverse by Racoon(m): 2:04pm On May 01, 2020
In so much that Nigeria economy is presently being managed by dull inexperienced people, the these western imperialist economic hounds like the IMF should pls take a back.

mrvitalis:
And some idiots wants us to believe it's not a loan

15 Likes 2 Shares

Re: IMF Lists Unpopular Policies CBN Must Reverse by AlhajaChinyere: 2:11pm On May 01, 2020
Useless, indisciplined race of idiots. Black Africans will suffer from generation to generation. Like stupid slaves they will spenf the borrowed money on consumer products to big up against each other.

190m idiots that produces nothing!

49 Likes 3 Shares

Re: IMF Lists Unpopular Policies CBN Must Reverse by Nigeriabiafra80: 2:12pm On May 01, 2020
Buhari have sold the country

3 Likes

Re: IMF Lists Unpopular Policies CBN Must Reverse by AlhajaChinyere: 2:14pm On May 01, 2020
Racoon:
In so much that Nigeria economy is presently being managed by dull inexperienced people, the these western imperialist economic hounds like the IMF should pls take a back sir.

Dull inexperienced? How did the ugly fat yamlegged world bank woman do?
Until we as a people start producing what we consume we might as well stop procreating!!! We are currently just surviving and of no use to the world!

37 Likes 7 Shares

Re: IMF Lists Unpopular Policies CBN Must Reverse by mrvitalis(m): 2:15pm On May 01, 2020
And some idiots wants us to believe it's not a loan

2 Likes

Re: IMF Lists Unpopular Policies CBN Must Reverse by Yankee101: 2:16pm On May 01, 2020
The IMF always trying to control developing countries

Improve imports and flood your country with cheap, substandard foreign products of their masters. They'll never talk of growing local content

All cos of small $3b, which if we had diversified our economy shouldn't be a problem. Okonjo created an excess crude account, Ameachi took her to court to share the money. Today nko?

60 Likes 8 Shares

Re: IMF Lists Unpopular Policies CBN Must Reverse by StagethemTVee: 2:19pm On May 01, 2020
what
Re: IMF Lists Unpopular Policies CBN Must Reverse by gbebodye(f): 2:19pm On May 01, 2020
lol, this table no get leg o

grin


https://www.youtube.com/watch?v=-I525KtbupI
Re: IMF Lists Unpopular Policies CBN Must Reverse by vickydankal(f): 2:19pm On May 01, 2020
Good
Re: IMF Lists Unpopular Policies CBN Must Reverse by ignis: 2:19pm On May 01, 2020
A beggar always have no choice.

2 Likes 2 Shares

Re: IMF Lists Unpopular Policies CBN Must Reverse by Nobody: 2:19pm On May 01, 2020
.

1 Like

Re: IMF Lists Unpopular Policies CBN Must Reverse by AngelaUdoka(f): 2:19pm On May 01, 2020
Space booked
Re: IMF Lists Unpopular Policies CBN Must Reverse by goodlistener: 2:20pm On May 01, 2020
Good, no be una wan borrow money, you accept whatever conditions given to you. Begger no get choice. Money that I will not see d break light. Wetin concern me jare.

14 Likes 1 Share

Re: IMF Lists Unpopular Policies CBN Must Reverse by Bambarino: 2:20pm On May 01, 2020
summary please
Re: IMF Lists Unpopular Policies CBN Must Reverse by omonnakoda: 2:21pm On May 01, 2020
AlhajaChinyere:
.

190m idiots that produces nothing!

What number are you?

17 Likes 3 Shares

Re: IMF Lists Unpopular Policies CBN Must Reverse by Openbusiness: 2:21pm On May 01, 2020
IMF never give loans without DEVALUING the currency of their borrower. Zoohari government is about to fulfill their campaign promise of making $1 = N1 [ -K- ] naira grin

2 Likes 1 Share

Re: IMF Lists Unpopular Policies CBN Must Reverse by Dpharisee: 2:21pm On May 01, 2020
IMF conditions are not for African economies to achieve growth or they will become irrelevant as no country will need there money anymore.

Allow Igbo, Hausa, Yoruba, Efik,TIV etc business men to negotiate on our behalf with IMF and they won't be able to cheat us and not career civil servants doing it. The average Igbo man will never trust a White man and would ensure that every Kobo counts. Ask GTB and Innoson

14 Likes 2 Shares

Re: IMF Lists Unpopular Policies CBN Must Reverse by Kingrefreshed: 2:21pm On May 01, 2020
Blue3k:


Source: https://nairametrics.com/2020/04/30/imf-list-unpopular-policies-cbn-must-reverse/


IMF,WHO and every other international organization gives little fuuuuck about african nations.

2 Likes 1 Share

Re: IMF Lists Unpopular Policies CBN Must Reverse by tamdun: 2:22pm On May 01, 2020
Unbanned 41 items? So we can start importing goods from Europe abi

15 Likes 1 Share

Re: IMF Lists Unpopular Policies CBN Must Reverse by Badonasty(m): 2:22pm On May 01, 2020
another SAP loading....Nigerians brace up

3 Likes 1 Share

Re: IMF Lists Unpopular Policies CBN Must Reverse by Nobody: 2:22pm On May 01, 2020
Their conditions always comes with what will benefit them

4 Likes 1 Share

Re: IMF Lists Unpopular Policies CBN Must Reverse by Bukayot: 2:22pm On May 01, 2020
Ok
Re: IMF Lists Unpopular Policies CBN Must Reverse by pat077: 2:22pm On May 01, 2020
No need taking their loan if u can't agree to their terms and conditions.

4 Likes

Re: IMF Lists Unpopular Policies CBN Must Reverse by yomalex(m): 2:22pm On May 01, 2020
Hmm
Re: IMF Lists Unpopular Policies CBN Must Reverse by merits(m): 2:22pm On May 01, 2020
cool shocked

6 Likes 1 Share

Re: IMF Lists Unpopular Policies CBN Must Reverse by Openbusiness: 2:23pm On May 01, 2020
Till today, since 1999 civilian rule started, OBJ government remains the best of all the useless governments that have come and gone. Yes, OBJ government had many flaws but it is by far the best of them all. Same price oil is selling NOW is the same price it sold when OBJ was in power yet he performed better than all these other useless governments combined, especially this ZOohari government that is the worst civilian government in Nigerian history. During OBJ time we know what the naira to dollar exchange was, around 1/3 LESS of what it is today, and he got our foreign debt of billions of dollars cancelled, foreign investors were rushing Nigeria like gold, he built a strong economy that international bodies were eager to invest in, Dangote blow like mad, Music industry blow, commerce blow, agriculture blow, telecoms blow, everything start to gather momentum. I'm sure if Nigerians had seen the future and had known it would be as terrible as this Zoohari government, Nigerians would have approved it for the Senate to keep OBJ in power for 8 terms sef, he would have done far better than this one that loves cows more than human beings. OBJ practiced federal character to the core, he carried every region along, not like this one that is the most tribalistic government we have ever seen in this country.

33 Likes 6 Shares

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