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Emefiele: Inflation to subsist till December

The current rise in inflation will subsist till December 2020 when effect of produce harvest begins to manifest, Governor of Central Bank of Nigeria (CBN), Godwin Emefiele, has said. Making the prediction in Abuja yesterday, Emefiele said: “Inflation was exacerbated by increase in Value Added Tax (VAT) rate, exchange rate adjustment and seasonal food supply shocks due to onset of farming season and other structural bottlenecks.”

He spoke at the 13th Annual Banking and Finance Conference of Chartered Institute of Bankers of Nigeria (CIBN), which had Minister of Finance, Budget and National Planning, Hajiya Zainab Ahmed, and other finance stakeholders in attendance. The National Bureau of Statistics (NBS) yesterday put August inflation at 13.22 per cent, pegging increase on rising cost of food stuff and other services. Emefiele said: “The increase in price of energy and electricity for the manufacturing companies will lead to import inflation because our economy is significantly import-dependent.

“The CACOVID alliance led to the provision of over N23 billion in relief materials to affected households, and the set-up of 39 isolation centres across the country.” With regard to N100 billion target credit facility for affected households and Small and Medium Enterprises (SMEs) through the NIRSAL Microfinance Bank, the CBN governor revealed that close to N69 billion had been disbursed to over 140,000 households and businesses. On crude oil price, the CBN governor said: “The price of crude oil in international markets still hovers between $19 per barrel and $40 per barrel against the benchmark of $60 per barrel.

“This is attributed to cut in oil production by OPEC and also the impact of the pandemic on prices. We are not hopeful that for the rest of 2020 it will go above $50 per barrel, but if we are lucky, it may reach $50 per barrel.” Emefiele stated that the banking sector should increase its support for the agriculture sector, noting that “if measures had not been taken earlier to improve cultivation and processing of staple crops in Nigeria prior to the onset of the pandemic, we would have had to deal with a major food crisis in the country.”

He also told the bankers that “over the next four years, the banking sector should consider ways under which it could increase its loans to the agriculture sector from four per cent to 10 per cent by 2024.” In her opening remarks, the minister urged banks to key into its economic restructuring measures and rely less on regulatory relaxations and other measures. Ahmed said: “Government, working with regulatory authorities, had stepped forward with various liquidity, monetary, prudential and supervisory measures in the form of interest rate cuts, higher structural and durable liquidity, moratorium on debt servicing and forbearances on asset provisioning.”

This framework, she said, “is a well thought-out decision taken in consultation with stakeholders and is aimed at striking a balance between protecting the interest of depositors and maintaining financial stability.” Another thrust of the new framework, according to her, is “preserving the economic value of viable businesses by providing durable relief to businesses, as well as individuals affected by the COVID-19.” Going forward, she said government would ensure efficient and diligent implementation of the restructuring measures by banks, keeping the above objectives in mind. According to her, “While the moratorium on loans was a temporary solution in the context of the lockdown, the restructuring framework is expected to give durable relief to borrowers facing COVID-19 related distress.” On his part, the CIBN President, Bayo Olugbemi, said the conference theme was selected in line with the current realities in the banking sector following disruptions brought by the COVID-19.

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