COVID-19: CBN cautions FG against another lockdown

By Eyo Nsima

As the Federal Government to tackle the Corovarus pandemic, the Central Bank of Nigeria, CBN, has warned against imposing another total lockdown, arguing that it would impact negatively on the nation’s economy.

The CBN Governor, Godwin Emefiele, who disclosed this in a communique issued at the end of  the meeting Monetary Policy Committee (MPC) of the apex bank in Abuja, said: “While expressing understanding of the public health dilemma of the recent spike in infections, MPC encouraged the government not to consider a wholesome lockdown of the Nigerian economy so as not to reverse the current gains of the stimulus earlier provider in 2020.”

Emefiele said: “As long as we see that there is second wave (of COVID-19)  even in Nigeria, while we are trying to convince government not to adopt the wholesome lockdown because that will be catastrophic for everybody and the economy, we would extend by 12 months again interest rate of  five percent for CBN intervention funds.

“It will result in losses for us particularly if we see yields going up but we think these should be also CBN contributions to ensure that interest rate particularly for our intervention funds which are targeted to either households, or SMEs, Agric, Health sector, pharmaceuticals,  that will increase  manufacturing output, we would continue to support it, we would continue to do so.”

Also speaking on the nation’s Monetary Policy, he said: “The MPC was of the view, that whereas there may be wisdom in loosening, given that the impact of the global Covid-19 pandemic has resulted in constrained activities, disruption to supply chain and suppress aggregate demand, an accommodative  stance may be required to stimulate credit expansion and boost recovery in the short term.

“The Committee was also of the view that an expansionary policy would enable the monetary authorities to convince the financial institutions to reduce loan pricing and defer interest and principal repayments to critically affected obligors in a sustainable manner. On the flip side, MPC also opined that an aggressive expansionary stance may worsen both inflation and the negative real interest rate, thereby resulting in negative consequences on exchange rate.

“With regard to tightening, MPC concluded that this may run contrary to its objectives of providing affordable credit to households, MSMEs, Agriculture, and other output growth and employment stimulating sectors of the economy. MPC was therefore of the view that it should pursue its current stance of systematic synchronization of monetary and fiscal policy accommodation through its developmental finance initiatives, aimed at mitigating the impact of the COVID-19 pandemic on Nigerians.”

Also, commenting on the nation’s economic economic growth, he said: “In light of the on-going synchronized efforts by the monetary and fiscal authorities to mitigate the impact of the COVID-19 pandemic, the Bank has committed substantial amount of money towards this objective. Indeed, total disbursements as at January 2021 amounted to N2.0 trillion.

“COVID-19 Targeted Credit Facility (TCF) meant for household and small businesses, wherein we have disbursed N192.64 billion to 426,016 beneficiaries. We have also disbursed N106.96 billion to 27,956 beneficiaries under the Agri-Business Small and Medium Enterprises Investment Scheme (AGSMEIS), while in the Health Care Support Intervention Facility, we have disbursed N72.96 billion to 73 project that comprise 26 pharmaceutical projects and 47 Hospitals and Health Care Services Project in the country.”

He added: “To support the provision of employment opportunities for the Nigerian youth, the Central Bank of Nigeria also provided financial support through the Creative Industry Financing Initiative and Nigerian Youth Investment Fund amounting to N3.12 billion with 320 beneficiaries and N268 million with 395 beneficiaries, respectively. On enhancing power supply, the Bank has so far, provided N18.58 billion for the procurement of 347,853 electricity reading meters  to Discos in support of the National Mass Metering Programme.”