The Central Bank of Nigeria (CBN) has settled foreign exchange forwards worth $2 billion in a strategic move towards creating a conducive business environment, while fulfilling its commitment to eliminate the backlog of pending matured foreign exchange in Deposit Money Banks (DMBs).
The move, aimed at swelling investors’ confidence, also saw the apex bank disburse about $61.64 million to foreign airlines through various banks. Spokesperson of the apex bank, Mrs Sidi Ali Hakama, said the move was part of the CBN’s efforts to reduce its outstanding liabilities to the airlines.
Ali further disclosed that, the redeemed outstanding foreign exchange forward liabilities amounting to $2 billion was cleared within three months.
“This underscores the Bank’s commitment to the resolution of pending obligations and a functional foreign exchange market.
“These payments signify the CBN’s ongoing efforts to settle all outstanding valid forward transactions, with the aim of alleviating the current pressure on the country’s exchange rate.
“It is anticipated that this initiative by the CBN should provide a considerable boost to the Naira against other major world currencies and further increase investor confidence in the Nigeria economy”, she explained.
Recall that the CBN Governor, Mr. Olayemi Cardoso,had during the 58th Annual Bankers Dinner in Lagos last weekend, said strategic reforms were underway to revive the economy and ultimately achieve the projected growth.
He said the CBN was currently undergoing internal realignments to achieve regulatory fortification needed to perform its oversight functions more effectively.
He said the CBN has approved the adoption of an explicit inflation-targeting framework to enhance the effectiveness of the monetary policy.
“The details and requirements for this framework are currently being finalized alongside the fiscal authorities”, he said.
According to him, the apex bank, in the past, burnt its fingers by straying from its core mandate of price stability and groping into unfamiliar terrains.
Cardoso said the greatest gaffe was embarking on uncoordinated intervention programmes which gulped over N10 trillion with minimal impact on the economy.
He added that the interventions were unorthodox deployment of monetary policy tools without clarity between fiscal and monetary policies.
He identified those areas of intervention the CBN went into with limited expertise to include; agriculture, aviation, power, youth development among others, which distracted it from achieving its core objectives.
He said the bank would junk such a template since it did not yield the desired results.
“Instead of direct interventions, we will collaborate with stakeholders and formulate policies that create an enabling environment for sustained economic growth and development. Our catalytic role will support increased investment and private sector participation in the economy, improve access to finance for MSMEs, and enhance financial services for the underbanked. This includes promoting specialized institutions and financial products to support emerging sectors, developing regulatory frameworks to unlock dormant capital in land and property holdings, facilitating accelerated access to consumer credit, and expanding financial inclusion to reach the masses.
“We will work with experts to develop derisking instruments that encourage private sector investment in key industry verticals such as housing, textiles and clothing, food supply chain, healthcare, and educational supplies, which have high potential for local inputs and value retention. The CBN will leverage its convening power to engage multilateral and international stakeholders in government and private sector initiatives,” he explained.
To reset the monetary policy space, Cardoso said deposit money banks in Nigeria must raise their capital base to build the financial capacity to service the demands of a $1 trillion economy.
SOURCE: THESUN
