CBN says its interventions saved Nigeria from economic downturn
The Central Bank of Nigeria, on Tuesday, issued a rejoinder on the Nigerian Economic Summit Group (NESG) request that President Muhammadu Buhari should withhold assent to the repealed and re-enacted Bank and Other Financial Institutions (BOFIA) Act 2020, passed by the national assembly .
NESG criticised some of the policies of the apex banks aimed at cushioning the effect of coronavirus on businesses and the entire economy.
NESG claimed that some aspects of the BOFIA law contain some provisions that violate the constitution and bestowed immunity on the CBN governor.
But in a swift reaction, the CBN categorically stated that the policies were aimed at supporting governmental efforts to curtail the spread of the pandemic and lessen its devastating impact on the economy
CBN’s Director of Corporate Communications, Isaac Okorafor, the CBN said the measures taken by the CBN were targeted at stabilising the financial system and ensuring faster recovery of the economy, following the negative impact of the COVID-19 pandemic on Nigeria
The CBN said the impact of the coronavirus crisis on countries around the world propelled a significant downturn in the Nigerian economy, which triggered imposition of lockdown measures in a bid to contain the pandemic spread.
According to the statement, this prompted depressed economic activities and lower productivity in the first half of the year.
“As we all are aware, the impact of COVID-19 on countries across the world resulted in a significant downturn in the global economy. Consequently, countries including Nigeria were forced to impose lockdown measures in order to contain the spread of the pandemic,” Okorafor said.
“This action resulted in depressed economic activity in the first half of the year. Except for China
and Vietnam, advanced, emerging and frontier market economies, all experienced significant negative growth in the first half of 2020, and some are currently in a recession.
“In response to these unfortunate events across the globe, the central banks across the world had to embark on extraordinary measures in order to stabilize the economy from an extraordinary shock.
“We took steps to increase the flow of credit to critical sectors of the economy, in order to enable faster recovery of the economy.”
According to the CBN, some of such measures include a year moratorium on principal repayments for CBN intervention facilities, shoring up the loan-to-deposit-ratio policy, creation of a N50 billion target credit facility for households and businesses severely affected by COVID-19 through NIRSAL Microfinance Bank among others.
According to him, the GDP declined by 6.1 per cent, contrary to initial 7.4 per cent downturn projected by financial analysts.
The apex bank linked the reduction in to the impact of the measures by the monetary and fiscal authorities.
“This decline was less severe than the decline experienced in other economies such as the United States, South Africa, and India which saw significant declines in growth by 32 per cent, 52 per cent and 23 per cent respectively.
“It is important for the NESG to note that our intervention programmes in the agricultural sector were a key contributor to the resilience of the agricultural sector during the crisis.
“The sector experienced positive growth of 1.6 percent in the second quarter of the year despite the lockdown. As the NESG may be aware, as a result of the COVID-19 pandemic,Vietnam, Cambodia, India, and Thailand placed export restrictions on the exports of critical food items, including rice and eggs.
“With these disruptions, the Nigerian economy could have faced a major food crisis, but for the government’s intervention programmes in the agriculture sector,” Okorafo added.
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