The Central Bank of Nigeria (CBN) has said all the states that benefited from the bailout loans will pay back just as it has agreed that banks should recover their funds.
The CBN Governor, Mr. Godwin Emefiele disclosed this while briefing the press during the May 2021 Monetary Policy Committee Meeting (MPC).
The MPC also voted to retain all rate constraints to rein in inflation. They voted to retain the MPR at 11.5 percent; retain the asymmetric corridor of +100/-700 basis points around the MPR; retain the CRR at 27.5%, and retain the Liquidity Ratio at 30%.
Speaking on the loans, Emefiele said some of the loans were sourced from the commercial banks by the states and the banks wrote to demand repayment.
“They went to deposit money in banks; they asked for a loan, they signed the offer letters with those banks. They signed an agreement (the irrevocable standing order) with the Federal Ministry of Finance (MOF) that on a monthly basis MOF should deduct from their monies and pay the banks for the loans.
“I am aware that the banks have written to Finance and they have copied me, that they want their money.”
On the retained monetary indices, Emefiele said, “Whereas the Committee remained overwhelmingly committed to supporting the efforts of the Federal Government in ensuring full restoration of the productive capacity of the economy, members remained much more focused on achieving price stability in the short to medium-term.
“The MPC noted that economic growth could be hampered in an environment of unstable prices.”
On the naira for dollar scheme, he said the scheme has been extended indefinitely to encourage more remittances.
MPC noted that in spite of the interventions in the agric and business sectors, the Bank should continue to aggressively increase its interventions in agricultural processing and manufacturing.
Commenting on the MPC decision, a professor of capital market and former Commissioner of Finance in Imo State, Uche Uwaleke, said, “I think a hold position was the most expedient decision to take given the prevailing economic condition of the country.
“As long as Stagflation continues to challenge the economy, the CBN’s monetary policy stance will be dictated by the need to strike a balance between tackling inflation and supporting economic growth.”
