The vote to cut the cash reserve requirement from 31 percent was by 7 to 3 votes of the monetary policy committee, he said, adding that the committee had voted unanimously to keep the main rate unchanged.
No government ministry, department or agency had been exempted from the recent directive on the Treasury Single Account policy introduced by the Federal Government, the Central Bank of Nigeria, CBN, governor, Godwin Emefiele, has said.
It would be recalled that some reports alleged linked to the Office of the Accountant-General of the Federation, OAGF, indicated that 13 agencies including, Bank of Industry, BoI, the Nigeria National Petroleum Corporation, NNPC, and Niger- Delta Power Holding Corporation, amongst others, were said to have been exempted from the TSA policy.
Nigeria’s central bank loosened monetary policy on Tuesday by injecting liquidity into banks, in a bid to stave off recession in Africa’s biggest economy, which has suffered as oil prices fell.
However, investors in the stock market appear not yet impressed with the return of stability in the banking sector as negative sentiments towards the banking stocks persisted, leading to further decline in the value of the banking sector index in the Nigerian Stock Exchange, NSE, for the third consecutive day in the week.
As the MPC expects the robust farm produce harvest in the fourth quarter to reduce pressure on food prices, Emefiele said there is need for synergy between monetary and fiscal policies.
“The committee noted that liquidity withdrawals following the implementation of the TSA, elongation of the tenure of state government loans as well as loans to the oil and gas sectors could aggravate liquidity conditions in banks and impair their financial intermediation role, thus affecting economic growth, unless some actions were immediately taken to ease liquidity conditions in the markets”.
Overall the MPC expressed optimism that business confidence will continue to be improved upon as the government continues to unfold its economic plans noting that “in addition, some of the reassuring measures of the administration including efforts aimed at resolving fiscal challenges at the sub-national levels and the fight against corruption and improved business environment will unlock investments”.
This has already reflected in the nation’s foreign reserves as the gross official reserves dropped from $31.20bn at the end of July to $30.63bn on September 17, 2015.
And I can tell you on good authority that the CBN is yet to be informed of any exemption from TSA for any agency.
“So as a result, I will advice all those who think they have been exempted to please avoid creating confusion”.
The Treasury Single Account is a unified structure of government bank accounts that allows consolidation and efficient use of government revenue for development. Mindful of the possibility of diversion of any extra liquidity to the foreign exchange market, the Committee urged the Bank to closely monitor the nature and sources of demand pressure in the foreign exchange market to ensure that funds were not diverted to demand for foreign exchange but applied to specific growth-enhancing asset creation lending by banks.
Although he acknowledged that there have been a lot of speculation in the market, he said as an on-going exercise, the impact of the policy would continue to grow as time goes.
“The liquidity ratio showed that Nigerian banks are safe”.