EHIME ALEX, Lagos
Dr Ayo Teriba, chief executive officer, Economic Associates (EA), said the Central Bank of Nigeria should have taken a leaf from other countries’ interventions which target the whole economy in its policy responses to the coronavirus pandemic.
Teriba, who is also a member of Board of Economic Advisers in the office of the Economic Adviser to the President, stated this in a chat with NATIONAL ACCORD, while giving an expert view on the announced CBN’s policy measures on coronavirus.
According to Teriba, in an opinion on the unveiling of N50 billion Fund, rates reduction and other policy responses to the coronavirus pandemic by the CBN, “It is only for the beneficiaries of the CBN Special Intervention Funds rather than for the generality of households and companies affected by the adverse economic fallouts of the Covid-19.”
He added that “The move, especially the additional one year moratorium, will protect the CBN’s loan book. Other countries’ interventions target the whole economy, by cutting the Monetary Policy Rate itself and providing liquidity for all classes of borrowers to protect all banks’ loan book.”
The policy measure which is to ensure that the nation’s economy pulls out of the coronavirus-fueled economic quagmire, was announced on Monday by Mr Godwin Emefiele, CBN governor.
According to Emefiele, the apex bank has acted in response to the coronavirus pandemic which has devastated the global economy creating unprecedented disruptions in global supply chains, sharp reduction in crude oil prices, turmoil in global stock and financial markets.
Thus, in line with global emergency action, the CBN in its response cut interest rates on all applicable CBN intervention facilities from 9 to 5 per cent per annum for one year effective March 1, 2020. The apex bank also granted a further moratorium of one year on all principal repayments, besides taking other measures.
In his briefing, Emefiele said, “All CBN intervention facilities are hereby granted a further moratorium of one year on all principal repayments, effective March 1, 2020. This means that any intervention loan currently under moratorium are hereby granted additional period of one year. Accordingly, participating financial institutions are hereby directed to provide new amortization schedules for all beneficiaries.”
He added that the apex bank “stands ready to provide liquidity backstops as and when required in view of its role as Banker to the Federal Government and lender of last resort. The CBN shall continue to monitor developments and will issue further updates as may be appropriate.”
It would be recalled that over the weekend, in a bold, emergency action, the United States Federal Reserve cut its target interest rate to zero, while strucking a deal with the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank and the Swiss National Bank to lower their rates on currency swaps to keep the financial markets functioning normally.