By Amechi Ogbonna with agency reports
THE Central Bank of Nigeria (CBN) yesterday said its decision to impose foreign currency controls in the economy was largely due to concerns about slowing growth in the economy following over four months of non appointment of cabinet ministers by President Mohammadu Buhari.
Although the President had submitted the list of his nominees for cabinet posts to the Senate for approval on Wednesday, foreign investors have criticised Buhari for failing to appoint ministers since he took office on May 29, leaving the central bank to deal alone with monetary policy controls in the heavily oil-dependent economy.
But speaking in defence of the measures so far taken by the apex bank to contain some adverse fallouts of the fall in crude oil prices, Director of Monetary Policy at the CBN, Mr. Moses Tule, said “We are concerned that we are having declining growth,” .
He defended the bank’s decision to impose currency controls to preserve foreign reserves, which fell 23 percent in the year to September. 23, according to CBN data.
“We have to protect the nation before we protect businesses,” Tule told a conference in Lagos where he came under fire from captains of industry complaining the dollar controls are hurting their businesses
Meanwhile, key opposition figures have since taken the government to task over the gap created by the non appointment of ministers by the administration which they argue was responsible for the lull in key sectors in Africa’s largest economy where growth in the last quarter slumped from over 6.5 per cent in the second quarter to about 2.35 per cent this year..
The consistent fall in oil revenues and an 8.8 per cent decline in import duty to N650.7billlion ($3.3billion) have eroded public finances, weakening the national currency and driving up the cost of food import in the first nine months.
Tule said the bank’s decision last week to cut the cash reserve ratio to 25 percent from 31 percent had injected N300 billion into the financial system.
Prior to the move, liquidity in the interbank market had dried up after banks were ordered to move government revenue to Treasury Single Account (TSA) at the Central Bank, said to be part of Buhari’s anti-graft drive.
JPMorgan is removing Nigeria from its emerging markets bond index (GBI-EM), forcing funds tracking the index to sell Nigerian bonds.
“There’s sufficient liquidity in the Nigerian banking system to take up whatever foreign investors may dump, so we are not disturbed,” said Tule.
Central Bank Governor Godwin Emefiele warned last week the economy might slip into recession in 2016.
Source : SunOnline