CBN not over funding FG – Emefiele

By David Agba Abuja–

Governor of the Central Bank of Nigeria (CBN) yesterday denied allegations that the apex bank was over-funding the federal government. Th is is even as the Monetary Policy Committee (MPC) retained the benchmark lending rate and other monetary policy rates against a backdrop of macroeconomic stability. Emefi ele said this in Abuja while addressing journalists on the outcome of the MPC meeting.

“Let me state categorically that the CBN has not over funded the federal government. “Th e federal government on its own decided that all its funds, both in local and foreign currency, should be moved to the Central Bank of Nigeria, into the Treasury Single Account.

“It is important to put it in perspective. You as a customer of a Central bank or any other bank, and you have fi xed deposit in an account and for some reasons you want spontaneous fi nancing to meet your obligation. “If you approach your bank to allow you to over-withdraw from your account temporarily, your bank will. So this has nothing to do with CBN or any other bank.

“Th e assurance I will give to you is this. Th ere is no truth in the issue of over funding because whatever is over drawn is far less than what the Federal Government also has in its TSA account. “So basically all this has to do with the lack of understanding of the operations of the CBN,” he said. It should be recalled that since July 2016, there has been no major monetary policy change. “On the argument to hold the rates, the committee believes that the eff ect of fi scal policy action towards stimulating the economy has begun to manifest as evidenced in the exit of the economy from the 15-month recession.

“Although it seems fragile, the fragility of the growth makes it imperative to allow more time to make appropriate complementary policy decision to strengthen the recovery “Secondly, the committee was of the view that economic activities would become clearer between now and the fi rst quarter of 2018 when growth is expected to have suffi ciently strengthened.

“Th e most compelling argument for a hold was to achieve more clarity in the evolution of key macro economy indicators, including budget implementation, economic recovery, exchange rate, infl ation and employment generation,” he said. Mr. Emefiele said that in arriving at the whole decision, the MPC was committed to employing maximum fl exibility to guide the economy on the path of utmost growth. He spoke on the concern raised by a member of Monetary Policy Committee (MPC), Dr Adedoyin Salami, over the CBN’s rise in fi nancing of the government, thereby limiting private sector access to credit.

Mr. Salami had in a communique no 114, said monetary data showed a sharp rise in the extent of CBN fi nancing of the Federal Government’s 2016 defi cit. He said the CBN had become a “piggy bank” in which over N1.5 trillion had been moved to service debt as at April, from N3 billion at the end 2016. … M r . Emefi ele refuted the claims that many c o m m e r c i a l banks had very high NonP e r f o r m i n g Loans, NPL, higher than the benchmark NPL rate of 5 per cent. He said that majority of the Money Deposit Banks had their NPL ratio hovering below or slightly above the 5 per cent benchmark. H e , however, agreed that the NPL of some few banks was above the benchmark rate. He said that the CBN would continue to do all in its power to ensure the sustainability of the Nigerian banking system.

 

 

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