Nigeria's Economy Could Slip Into Recession - CBN Warns

The Monetary Policy Committee of the Central Bank of Nigeria on Tuesday warned that the country’s economy could slip into recession by next year if proactive steps were not taken by the Federal Government to revive key sectors of the economy.

It also reduced the Cash Reserves Requirements for Banks from 31 per cent to 25 per cent as well as retained the Monetary Policy Rate at 13 per cent.

The committee also retained the symmetric corridor of 200 basis points around the MPR; and left the Liquidity Ratio unchanged at 30 per cent.

Addressing journalists shortly after the two-day meeting of the committee held at the CBN headquarters in Abuja, the CBN Governor, Mr Godwin Emefiele, noted that the economy had remained fragile owing to various factors.

For instance, he said the country’s Gross Domestic Product Growth Rate recorded a slow growth in the second quarter of this year, making it the second consecutive less-than-expected performance for the current fiscal year.

According to the National Bureau of Statistics, real GDP grew by 2.35 per cent in the second quarter of 2015, a significant decrease when compared with the 3.96 per cent and 6.54 per cent in the preceding quarter and corresponding period of 2014, respectively.

Real GDP growth is projected by the NBS to stabilise at 2.63 per cent in 2015, compared with the 6.22 per cent recorded in 2014.

Buhari Appoints PwC, KPMG to audit NNPC, CBN, Others

The Federal Government has appointed international audit firms, KPMG and PriceWaterhouse Cooper, to conduct comprehensive audit of the accounts of the Nigerian National Petroleum Corporation (NNPC) and other revenue generating agencies from 2012 to 2015.

Edo state governor, Adams Oshiomole announced this after the second meeting of the National Economic Council (NEC) in Abuja today August 13th.

“The probe will now cover value for expense as the affected agencies will be made to account for things expended on at their correct value. This is about making Nigeria work for the benefit of other Nigerians and we have to bear in mind that governments are not run on the basis of collection of crude oil but government regardless of colour or political affiliation is run on race and so if you have tax generating agencies that are not remitting taxes government cannot run like that" he told state house correspondents

CBN finally bans deposits into domiciliary accounts

In a circular released on Wednesday and signed by Olakanmi Gbadamosi, the director of trade and exchange, the central bank said its action followed recent statements by individual banks suspending the payment of foreign currencies into domiciliary accounts.

 Gbadamosi wrote:

 “The Central Bank of Nigeria has considered the recent statements by Deposit Money Banks (DMBs) concerning the large volume of foreign currencies in their vaults and the decision to stop accepting foreign currency cash deposits into customers’ domiciliary accounts as a welcome development. 

“Therefore, in its continued efforts to stop illicit financial flows in the Nigerian banking system which aligns with the anti-money Laundering stance of the Federal Government, the CBN hereby prohibits from the date of this circular the acceptance of foreign currency cash deposits by DMBs.

 “For foreign currency cash lodgments made prior to the date of this circular, the account holder has the option to either withdraw his or her foreign currency cash or the Naira equivalent. For the avoidance of doubt, only wire transfers to and from Domiciliary Accounts are henceforth permissible.

 “The CBN advises individuals that wish to source foreign currency for eligible and legitimate purposes such as BTA, PTA medical, mortgage, school fees, goods etc. to do so through recognized channels with the use of Form ‘A’ for “invisible” and Form ‘M’ for “visible” transactions.”

 By this circular, those who deposited foreign currencies into their accounts before the directive will now have to withdraw the cash as they are not going to be allowed to transfer the funds.

Banks, PDP kick against CBN’s policy

Banks and the Peoples Democratic Party, PDP, have kicked against the decision of the Central Bank of Nigeria, CBN, to bar foreign currency deposits into domiciliary accounts.

The PDP described the decision as illegal, unlawful, void, archaic and communist in nature, stressing that the President should be reminded that as a country, Nigeria was in a democracy and not military administration as in 1984.

A senior bank treasurer and executive member of Financial Market Dealers Association of Nigeria, FMDA, also described the policy as a knee-jerk measure, which was not sustainable, adding that banks’ decision to stop dollar deposits into domiciliary accounts was in protest of the new policy.

In a statement signed, yesterday, by PDP National Publicity Secretary, Chief Olisa Metuh, the party said that President Buhari’s regulations of the foreign exchange transactions in Nigeria where the administration was making it impossible for honest Nigerians to engage in free trade and regulate their personal activities as guaranteed by the constitution, was clearly an agenda to illegally impose a communist economic regime on Nigerians.

The party noted that the absence of an economic team at the moment, especially in the third month of the administration, was leading the country into economic quagmire and doldrums.

Vanguard

States To Repay Bailout Loans From Allocations

The Central Bank of Nigeria has revealed that the bailout package to states to enable them pay salary arrears will be deducted from their statutory allocations. From the discussion the CBN is having with some governors on how the fund will be disbursed, it is clear that rather than hand over the funds to them as grants, the CBN has opted to release it as a form of concessionary loans to be repaid over a long period of time. A top official in the Ministry of Finance said one of the criteria that might be used for the disbursement of the funds would be for the states to sign Irrevocable Standing Payment Orders guaranteeing the repayment of the loans. He said while the deductions from the states’ statutory allocations will not be immediate but will be deducted as country’s revenue profile improves.