CBN Insists on Giving Loans to Nigerian Despite IMF's Warnings

CBN Insists on Giving Loans to Nigerian Despite IMF's Warnings

  • The Central Bank of Nigeria (CBN) says it continues to support Nigerians through credit interventions in order to grow the economy
  • The CBN Governor, Godwin Emefiele said this during the quarterly Monetary Policy Meeting (MPC) in Abuja on Monday
  • Emefiele said the credit interventions by the CBN has brought relative stability to the economy especially during the height of the COVID-19 pandemic

CBN reacts to IMF's warnings

The Central Bank of Nigeria has insisted that its credit interventions are supporting the Nigerian economy, saying it will continue issuing credit facilities to Nigerians as that is a way to bolster the economy.

This is despite the warnings by the International Monetary Fund (IMF ) that the apex bank should scale back on its interventions as that is unhealthy to the economy.

Central Bank of Nigeria, Godwin Emefiele, International Monetary Fund, Nigerians
The Governor of the Central Bank of Nigeria, Godwin Emefiele. Credit. Victoy Akpeyi
Source: Depositphotos

The CBN Governor, Godwin Emefiele, in a communique said this at this year’s maiden edition of the Monetary Policy Committee (MPC) meeting in Abuja on Monday, March 21, 2022.

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He was reacting to the IMF’s recent report on Nigeria which asked the CBN to bring down its intervention programmes because they may cause market distortions.

Godwin Emefiele's reaction

Emefiele revealed how the IMF used interventions to bolster the economy during the peak of the COVID-19 pandemic.

What the IMF did during COVID-19 pandemic

Emefiele said that in 2020 due to the COVID-19 IMF opened its vault to every country for the Rapid Credit Facility (FCF), saying that Nigeria got the highest in Africa, about $3.4 billion.

He said the money from IMF helped the country during the period of the COVID-19. During the third wave in 2021, Emefiele said, the country also benefited got over $3 billion again.

According to Emefiele, the CBN is a development finance-focused institution that should deploy intervention to achieve its objectives.

He said:

“We reiterate the fact that the CBN remains a development finance-oriented central bank and it is normal for an emerging market, a good developing economy to deploy the development finance tools through intervention to support the growth of the economy. I think it is just reasonable that the CBN steps in to support the fiscal to fill that space not through grants but through loans to smallholder farmers, SMEIS and to wake up our manufacturing industries who are dead.”

He claimed that the over N300 billion given to over one million homes helped to re-inflate the economy and has helped Nigeria to return to good GDP ratings despite its fragility.

Emefiele said.

“IMF knows that even our intervention to manufacturing is helping and we have facts to show.”

IMF raises concern on Nigeria's 2022 fiscal year, warns trouble ahead over debt servicing, weak revenue has reported that the International Monetary Fund (IMF) has said the Federal Government could spend as much as 92.6 per cent of its revenue on debt servicing this year.

This is a significant increase from the 85.5 per cent debt servicing-to-revenue ratio it projected in 2020, The Guardian reports.

IMF projection is contained in its 2021 Article IV, which was released on Monday, 7 February 2022.


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