- Declining External Reserves: Nigerians Should Not Worry, Says CBN
The Acting Director, Corporate Communications of the Central Bank of Nigeria, Isaac Okorafor said the recent fall in the external reserves and rise in capital outflows are not a cause for worry.
The external reserves rose to $47.865 billion on May 10 before dropping to $46.461 billion on August 15, while capital outflow from foreign portfolio investment also so surged, raising concerns about the state of the economy ahead of the national election.
“In this country, we survived when the reserves was at $24bn; from there, we moved to $31bn, and now we are at about $47bn. So, I don’t see why we should be worried about this. Our reserves position is so comfortable that we can deal with any eventuality,” Mr Isaac Okorafor, said on Thursday at a press briefing after the Bankers’ Committee in Lagos.
According to him, capital outflows were not as much as projected, adding, “We are even in a better position of confidence.”
A statement, Mr. Ahmed Abdullahi, the Director of Banking Supervision, CBN, validated by saying the 2018 economic outlook was better than 2017.
He said, “We have seen stability in the exchange rate being sustained, GDP growth higher than 2017. There are capital reversals in our capital market, and it is a little bit bearish but the fact is that capital outflow in the Nigerian economy is far less compared to many emerging economies. It is a sign that there is high confidence in the Nigeria economy. We are happy with the developments in the economy generally.”
Similarly, Mr. Segun Agbaje, the Managing Director, Guaranty Trust Bank Plc, said economic fundamentals are very stable and positive, adding that the Monetary Policy Committee of the CBN and the Bankers’ Committee were committed to stimulating the economy.
He said, “You have heard about commercial papers or bonds that would be issued; the guidelines would come out very soon. The aim is two-fold: to stimulate certain sectors, starting with agriculture and manufacturing. So, it allows people to do capital expenditure, which is more long term; it would give people single-digit interest rate loans.”
“On the part of banks, the CBN has been very gracious and said that, ‘In these two sectors, if you have companies that are doing new capital expenditures and expansions to factories, you would be able to lend them using some of your Cash Reserve Ratio at nine per cent.’ These are not short-term loans; they are seven-year loans, with two year moratorium on principal.”
“It would probably be the first time in the history of this country where manufacturers would be able to take fixed interest rate loans for seven years, which means they would be able to plan. I think these are very laudable steps in improving and growing the economy.”