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States politicking with bailout funds’ll have them withdrawn —CBN
The Central Bank of Nigeria, CBN, said it will withdraw bailout funds from states whose governments are politicking with the funds allocated to them.
The Governor of the CBN, Mr. Godwin Emefiele, disclosed this while briefing journalists on the outcome of the Monetary Policy Committee, MPC, meeting in Abuja, yesterday.
According the governor, the CBN will not be dragged into politics as to whether or not the bailout funds were being used as political tools but that it would withdraw any money that is unutilised by states that got the bailout fund.
He said: “I must say here that we do not know anything about political tool. We are not involved in politics. We are professional bankers who do our work. The truth is that there were some revelations that some of the funds were not being used but held in banks. Once we know that the monies are not being used for the purposes for which they were meant, we will reverse those entries from the banks.”
He also announced a reduction in the Cash Reserve Requirements from 25 per cent 20 per cent in order to increase liquidity in the banking system and a reduction of the Monetary Policy Rate from 13 per cent to 11 per cent.
Emefiele, however, put a proviso, namely, that the extra funds would be released only to banks that would give loans to the real sectors of the economy with the aim of generating employment and stimulating growth.
According to him, the liquidity arising from the reduction of the CRR to 20 per cent will only be released to banks that are willing to channel the funds to employment generating activities in the economy such as the real sector, infrastructure, agriculture and the solid minerals sectors of the economy.
His words: “Basically, you would remember at the last Bankers Committee meeting, we said we have attained the end of tightening and that there was need for the CBN to put in place policies and regulations that would stimulate growth, create employment and see how those policies would help to moderate prices and control inflation in the economy. This is the essence of the reduction in key monetary indices.
“At the last MPC we took the decision to ease. That was why we reduced the CRR from 30 per cent to 25 per cent. Unfortunately, we thought that by allowing banks to have increased liquidity, they would channel such excess liquidity to the sectors that we think would be employment generating sectors that would support growth, stimulate development and reduce the level of unemployment.
“Unfortunately that has not happened. So, what we decided to do at this meeting is to say, yes, we must stimulate growth. We do not have a choice in the face of challenges facing the global economy and Nigeria is not insulated from this. That we must contribute to growth.
“And to do so, we decided that as we continue to ease, going forward, we will ensure that funds that are going to be injected into the system are directed at real sectors, infrastructure, power, agriculture and solid minerals by the banks where we think we have a lot of potential to spur exports so that we can generate revenue.”
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