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Edo State Governor Godwin Obaseki has raised an alarm and strongly disagreed with some policies recently introduced by the Central Bank of Nigeria (CBN), arguing that the new policies are going to be detrimental to the Nigerian economy.
TheNewsGuru.com (TNG) reports the policies recently introduced by the CBN through the Monetary Policy Committee (MPC) involve raising the monetary policy rate (MPR) by 400 basis points to 22.75 per cent from 18.75 per cent.
The asymmetric corridor around the MPR was adjusted to +100 -700 basis points from + 100 -300 basis points, the Cash Reserve Ratio (CRR) was increased from 32.5% to 45%, while the Liquidity Ratio was retained at 30%.
TNG reports the monetary policy rate (MPR) is the baseline interest rate in an economy on which every other interest rate used within the economy is built on it.
Speaking as the Special Guest of Honour at the annual dinner of Edo Zone Bankers’ Committee in Benin city, Governor Obaseki stressed that the policies rolled out by the apex bank unfortunately will not support growth in the economy.
The Edo State Governor further stressed that small borrowers and small businesses need access to credit at a price to help them grow their businesses and that jobs needed to be created for the teeming Nigerian youth population.
Urging the government to focus on the fundamentals by increasing production and making sure citizens produce the goods and services consumed in the country and depend less on imports, Obaseki argued that the nation’s economic policies and monetary policies cannot be determined by exchange rates alone.
“The policies rolled out by the Central Bank unfortunately will not support growth in our economy. Interest rates are already very high and jacking it up further, clearly will not allow small borrowers and small businesses access to credit at a price to help them grow their businesses.
“When an economy is in this state, it needs all the support and push it can. I understand the monetary rationale for increasing MPR but fundamentally and fiscally, it is not going to lead to growth in our economy.
“We must focus on the fundamentals, which is increasing production, making sure our citizens produce the goods and services we consume and depend less on imports. Our economic policies and monetary policies cannot be determined by exchange rates alone.
“So, this whole issue of increasing cash reserves in the bid to tighten liquidity is going to be detrimental to our economy. I understand the challenge the monetary authority is faced but unfortunately you cannot clap with one hand.
“The economy is about fiscal and monetary policies; both must work hand in hand. When they don’t as they don’t in Nigeria, you have a crisis. So, we should focus on fiscal issues so that we can grow our economy out of the challenges we have,” Obaseki said.
Speaking further, he said: “We should not panic too much because of foreign exchange. We must focus on how we can do things within our economy, how we can grow our economy to earn more foreign exchange if foreign exchange is our problem.
“But I believe that creating jobs for young people should be more of a priority for us as a people at this time”.