The Central Bank of Nigeria (CBN) has dismissed allegations by the Nigerian Economic Summit Group (NESG), which questioned some of the measures taken by the apex bank to address the devastating impact of the coronavirus (COVID-19) pandemic on the nation’s economy.
The apex bank stated that it embarked on extraordinary measures in order to stabilize the economy from an extraordinary shock. In a statement signed by the Director, Corporate Communications Department, CBN, Mr. Isaac Okorafor, the apex bank expressed concern that despite what it described as the, “cordial and open relations between both organizations,” the NESG chose not to raise the allegations directly with it, but instead released a press statement, the contents of which the economic summit group had earlier leaked to a leading business newspaper in the country.
According to the CBN, the NESG’s allegations “are reflective of sinister motives and malicious intent.” The apex bank noted that: “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. 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.”
Pointing out that the crisis led to Nigeria suffering over 65 per cent drop in commodity prices, which resulted in an over 60 per cent reduction in revenues due to the Federation Account as well as a significant drop in foreign currency inflows, thereby triggering downward adjustments in the naira/ dollar exchange rate and a rise in inflation, the CBN said, like its counterparts across the world, it had to “embark on extraordinary measures in order to stabilize the economy from an extraordinary shock.”
The regulator, which listed some of the measures it introduced to cushion the impact of pandemic on the economy, stressed that it was the impact of the measures by the country’s monetary and fiscal authorities that helped to reduce the expected GDP contraction in Q2 to 6.1 per cent.
“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.
“We do expect that with the phase out of the lockdown measures, GDP growth in the 3rd quarter will be much better than that of the 2nd quarter, due to the impact of the measures being implemented by the Monetary and Fiscal Authorities,” the CBN said.
Responding to the NESG’s allegation that its lending process is devoid of a proper framework, the regulator pointed out that recipients of its intervention funds go through an “expansive due diligence process through participating financial institutions (PFIs), following which an additional assessment process is embarked upon by the CBN before disbursements are provided.”
The banking watchdog also dismissed the NESG allegation that revisions to the BOFIA Act are intended to confer immunity on the Governor of the CBN.
According to the apex bank, “There are many reasons why we see a total ignorance or malicious intent on the part of the NESG. First, the provision they refer to as being currently conceived as part of the new BOFIA already exists as Section 53 in the old Act, which is now Section 51 in the amended Act passed by the National Assembly.
“The current bill has not proposed any changes to that section at all. Second, contrary to their misleading anxiety and associated reportage, the provision of Section 51 does not purport to confer immunity on the Governor of the Central Bank of Nigeria like that which obtains for state governors.
“Rather, this provision protects the Federal Government, the CBN and their respective officials against adverse claims for actions or omission in good faith exercise of powers under BOFIA and other specified statutes including the CBN Act and regulations made thereunder.”