The Central Bank of Nigeria, CBN, has raised the Cash Reserve Ratio, CRR, on public deposits from 50 per cent to 75 per cent with effect from next month.
The Governor of the apex bank, Mallam Sanusi Lamido Sanusi, who announced the new measure to further tighten monetary policy, in Abuja, yesterday, said the action was necessary to save the Naira from further fall in value.
MPR remains at 12 per cent +/- 200 basis points and liquidity ratio (LR) at 30 per cent while private deposits’ CRR remains at 12 per cent.
He expressed concern over the continued depletion of the Excess Crude Account, ECA, which balance stood at less than US$2.5 billion on January 17, 2014 compared with about US$11.5 billion in December 2012.
“This absence of fiscal buffers increased our reliance on portfolio flows thus, constituting the principal risk to exchange rate stability, especially with uncertainties around capital flows and oil price,” he said.
Sanusi queries oil revenue
On the depletion of fiscal buffers, the committee decried the continuous fall in revenue from oil despite stable price of oil and production in 2013.
Although the committee acknowledged output losses due to theft and vandalism, this could not wholly explain the magnitude of the shortfall in revenue.
As a consequence, accretion to external reserves remained low while much of the previous savings have been depleted, thereby undermining the ability of the Central Bank to sustain exchange rate stability.
He said: “On the depletion of fiscal buffers, the committee decried the continuous fall in revenue from oil despite stable price of oil and production in 2013.
“Although the committee acknowledged output losses due to theft and vandalism, this could not wholly explain the magnitude of the shortfall in revenue.”
As a consequence, accretion to external reserves remained low while much of the previous savings have been depleted, thereby undermining the ability of the Central Bank to sustain exchange rate stability.
The committee therefore, urged the fiscal authorities to block revenue leakages and rebuild fiscal savings needed to sustain confidence and preserve the value of the naira.
Falling reserves
Sanusi noted that reserves had fallen to $42.85 billion, representing a decrease of US$ 0.98 billion or 2.23 per cent compared with $ 43.83 billion at end-December 2012, in spite of good international oil market prices in 2013.
The governor, therefore, urged the “fiscal authorities to block revenue leakages and rebuild fiscal savings needed to sustain confidence and preserve the value of the naira.
No comments:
Post a Comment