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CBN Concern over Nigeria Slow Economic Growth

CBN

CBN said the banking system had enough liquidity to take up what foreign investors might sell after JP Morgan removed Nigeria from its bond index.

The Apex Bank plan to retain foreign currency controls because of concerns about slowing growth, a senior bank official said on Wednesday.

Growth was 2.35 percent in the second quarter year on year, compared with 6.54 in the same quarter of 2014.

“We are concerned that we are having declining growth,” Moses Tule, the CBN monetary policy director, told reporters.

He defended the bank’s decision to impose currency controls to preserve foreign reserves, which fell 23 per cent in the year to Sept. 23, central bank data showed.

“We have to protect the nation before we protect businesses,” Tule told a conference in Lagos where he came under fire from executives complaining the dollar controls were hurting their businesses.

Import duty collections fell 8.8 percent to 650.74 billion naira ($3.3 billion) in the first nine months.

Tule said the CBN decision last week to cut the cash reserve ratio to 25 percent from 31 percent had injected 300 billion naira into the financial system.

Prior to the move, liquidity on the interbank market had dried up after banks were ordered to move government revenue to a single account at CBN, part of Buhari’s anti-graft drive.

“There’s sufficient liquidity in the Nigerian banking system to take up whatever foreign investors may dump, so we are not disturbed,” he said.

Recall that the Central Bank Governor, Godwin Emefiele said last week the economy might slip into recession in 2016.

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