By Kunle Adedoyin
The Central Bank of Nigeria (CBN) on Friday said it would continue to implement the cashless policy in line with its mandate to ensure an efficient payment system.
Mr Godwin Emefiele, the CBN Governor, said this while briefing journalists shortly after the Monetary Policy Committee (MPC) meeting.
He said that contrary to claims in some quarters that many Nigerians would suffer the negative impact of the policy, the policy is beneficial to majority of Nigerians as only about five to ten per cent of bank customers would be affected.
He said if the Nigerian economy is to compete effectively with those of developed countries, then a payment system that encourages the use of other non-cash channel was desirable.
The MPC at the meeting voted that the Monetary Policy Rate (MPR), which measures interest rate, should remain at 13.5%.
This is the third consecutive time that the committee will retain the rates since March 2019 when the rates were reduced by 50 basis points.
The Cash Reserve Ratio (CRR) was retained at 22.5%, liquidity ratio at 30% and asymmetric corridor at +200 -500 basis point.
Emefiele revealed that nine members of the MPC were present at the meeting and all members in attendance voted in favour of holding rates.
“Tightening in the midst of a fragile growth outlook would increase the cost of credit while loosening will heighten inflationary tendencies.
“Increased liquidity will result in exchange rate pressures as the money supply rises.
“Holding will require a clear understanding of the quantum and timing of liquidity injections into the economy before deciding on possible adjustments to the stance of monetary policy,” Emefiele said.
The committee expressed its support for the Federal Executive Council’s decision to increase value-added tax saying it would reduce the budget deficit and government borrowing when implemented.
“Committee noted that this was too little to close the gap in government financing and called on the government as a matter of urgency adopt a big bank approach towards building fiscal buffers by freeing up redundant public assets through an efficient and effective privatisation process,” Emefiele said.
“This would raise significant revenue for the government and resuscitate the redundant assets to generate employment and contribute effectively to national economic growth.”
The committee also advised the national assembly to “exercise restraint” from increasing budget oil benchmark since crude oil prices are projected to remain tight.
The Federal Government was also advised “to adopt other ways of funding its operations outside the banking sector” so that credit can be directed towards the private sector.