As nations of the world battle to contain COVID-19 pandemic, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has advised the Federal Government to take all necessary steps to safeguard Nigerians by preventing further spread of the scourge.
This was as the Committee retained all key monetary policy indices at its meeting yesterday.
MPC Chairman and CBN Governor, Mr Godwin Emefiele, who read out the committee’s decisions in a live telecast on Tuesday after its second meeting in 2020 explained that the Coronavirus pandemic remains a battle that must be won because it comes with health and economic catastrophes.
He said early defeat of the dreaded disease will lead to quick recovery of global economies that are already slipping into recession.
Emefiele said all the stimulus packages announced by monetary authorities to support the businesses and people would be useless if COVID-19 was not contained.
On monetary policy aggregates, Emefiele said the MPC held all money policy parameters constant, with the Monetary Policy Rate (MPR) at 13.5 per cent, liquidity ratio at 30 per cent, Cash Reserve Ratio (CRR) at to 27.5 per cent and the asymmetric corridor at +200 and -500 basis point around the MPR.
The CBN Governor further said that the Committee noted with concern the combined demand and supply shocks to the global economy arising from the outbreak of COVID-19 and the oil price war between Saudi Arabia and Russia.
“It also noted the weakening performance of global output growth since January 2020, reflected in losses in global stock values; declining primary commodity prices, disruptions to the global supply chain associated with large scale global lockdown of mega metropoles and whole countries; and social distancing.
“To mitigate this trend, there is a provision of an extended moratorium on loans by an additional one year beginning from March 2020. This is to ease pressure on loan repayments. The bank also reduced interest rates from 9 to 5 per cent on its existing intervention programmes over the next one year; created a N50 billion fund to support households and Small and Medium Enterprises (SMEs) affected by COVID-19; introduced credit support for the healthcare sector; introduced regulatory forbearance to consider temporary and time-limited restructuring of loan terms and tenors to households and businesses affected by COVID-19, and strengthened the loan-to-deposit ratio (LDR) policy. The Bank also announced an intervention fund of N1.1 trillion to cushion the adverse effects of the Coronavirus outbreak on the economy.
“The sum of N1.0 trillion from this amount will be used to support local manufacturing to boost import substitution, while the balance of N100 billion will be used to support the health services sector and products through the provision of loans to pharmaceutical companies, hospitals and other health practitioners to build new hospitals and health facilities or expand existing ones to first class health centres. This is in addition to the N1.5 trillion private sector driven Infraco Project fund, designed to target the construction of critical infrastructure across the country. In addition, pharmaceutical companies would be assisted through loan interventions to re-establish drug manufacturing firms in Nigeria and curtail the spread of the coronavirus”.Emefiele added that the Committee noted with satisfaction the growth in aggregate credit by N2.35 trillion since the inception of the LDR policy, reflecting the potency of the policy and thus urged the management of the bank to sustain the current momentum of improved flow of credit to the private sector in Nigeria.