CENTRAL Bank of Nigeria (CBN) Governor Mr. Godwin Emefiele has said he will announce new forex policy that will make forex procurement flexible.
The CBN Governor disclosed this yesterday in Abuja at the close of two-day deliberations by members of Monetary Policy Committee (MPC). While details of new forex policy are to be made public soon at yet to be disclosed date MPC members unanimously voted for retention of subsisting rates- the Monetary Policy Rates (MPR) Cash Reserves Requirement (CRR) and Liquidity ratio at 12 percent 22 percent and 30 percent respectively around asymmetric window at +200 and -500 basis points brushing aside analysts’ that had taken various positions on MPC outcome.
Briefing the media on decisions of the committee, CBN governor admitted that Nigeria economy faced a critical moment due to several factors that are both local and external influences. He said while slump in crude oil price was one aspect of the challenge, the logjam that characterised 2016 budget as he noted done serious damage to the economy. He called for speedy implementation of 2016 budget as a way of activating the economy.
“The Committee recalls that, over the last two consecutive meetings, it had signaled the imperative of reform of the foreign exchange market. In the intervening period, the Committee interrogated the issues around the current foreign exchange market regime, tracing them to the low foreign exchange earnings of the economy. Consequently, in the Committee’s opinion, the key issue remains how to increase the supply of foreign exchange to the economy. The Committee observed that while the Bank has been working on a menu of options to ensure increased supply of foreign exchange, there was no easy and quick fix to the foreign exchange scarcity problem as supply remained essentially a function of exports and the investment climate,” he said.
On economy showing sign of recession, the governor said: ” One aspect that is largely contributory to the situation we find ourselves today is the delay in the passage of the budget. The delay in the passage of the budget has created a few distortions in the system. You can imagine a situation where a budget that should have been passed in January or February latest was passed in May. The minister for budget and planning has committed that; it is going to be the last time this will happen. The important thing is to note that a lot of important things are predicated on the budget. When a budget is passed the money is ready to be spent either for capital projects. Construction workers can get back to work. Roads begin to be reconstructed again. People will buy cement, gravel and sand. Labourers will earn money. It will engender consumer purchases and what you find is that consumer purchases and other things consist about 85 per cent is component of GDP. Its a sad development for all of us, I am hoping that going forward we are working together to ensure that we are well coordinated going forward,” the governor said.
On scarcity of forex, Emefiele said the apex bank still sells at N197 to the dollar adding that, ” unfortunately the situation is that people are not able to to get the quantum they need. I imaging that people can understand the fact that this is because what CBN has in its Kitty as supplier of foreign exchange is inadequate to be able to meet the demand for foreign exchange. So, what we will do is to provide what we have available and expect that buyers will resort to other sources.”
When asked whether operators of bureau de change would be accommodated in the new flexible forex policy regime to be unveiled soon, the governor said BDCs will continue to source their forex from autonomous market.